Ginko International Co (金可國際), a leading maker of contact lenses and lens-care solution, has approved a proposal to distribute a NT$6.6 cash dividend per share based on last year’s record earnings per share of NT$15.7, with a payout ratio of 42.04 percent.
The proposed NT$6.6 cash dividend is bigger than the NT$5 the company distributed to its shareholders last year, when the payout ratio was 41.36 percent.
The operator of Formosa Optical (寶島眼鏡) in Taiwan and Hydron (海昌) brand contact lenses in China revealed its cash dividend plan on Friday last week after a board meeting.
During the meeting, the directors of the board also signed off on management’s performance report for last year.
Last year, the company saw its net income increase 35.02 percent to a record level of NT$1.42 billion (US$46.7 million) compared with NT$1.05 billion in 2012.
Earnings per share were NT$15.7 last year, an increase from NT$12.09 the previous year, while revenue rose 28.19 percent to NT$4.88 billion from NT$3.81 billion from a year ago, according to the company’s financial statement.
As of Sept. 31 last year, the company reported NT$1.8 billion available as cash in hand after the sale of NT$2 billion in convertible bonds in July.
As the company is due to distribute a NT$610 million dividend in the third quarter of this year, and has announced plans to expand its production capacity, Credit Suisse strategist Jeremy Chen (陳建名) said yesterday in a research note that Ginko might announce another round of fundraising before the third quarter later this year.
For this year, the company is expected to operate four new production lines in Taiwan and China this quarter and add another five lines in the final quarter of the year to amplify its production capacity, Macquarie Capital Securities Ltd analysts Aaron Wu and Tammy Lai (賴敏敏) said in a separate note, citing the management’s guidance.
“We believe new capacity will be mainly used for color lenses as Ginko aims to increase its color-lens in-house ratio to 60 percent to 70 percent in 2014 from 30 percent to 40 percent in 2013,” Wu and Lai said.
“However, given Ginko’s limited experience in color lens manufacturing, margins for color lenses may not improve quickly,” they added.
In the final quarter of last year, the company saw its gross margin slide to 58.8 percent from 63.6 percent in the previous quarter.
Ginko attributed the decline to its higher shipments of low-margin color lenses.
Shares of Ginko fell 0.35 percent to NT$566 yesterday, compared with the over-the-counter market index’s 0.48 percent increase, because of concerns over its margin outlook.
Shares have dropped 8.83 percent over the past three months, underperforming the 15.21 percent increase on the GRETAI Securities Market, where Ginko shares are traded.