Thu, Apr 24, 2014 - Page 13 News List

Lealea Group investing billions to upgrade, expand production capacity

By Camaron Kao  /  Staff reporter

Textile manufacturer Lealea Enterprise Co (力麗) yesterday said it would spend NT$3.5 billion (US$115.4 million) on capacity expansion in the next three years, including building a NT$2.5 billion factory to produce nylon 66 chips and yarns from adipic acid and other chemical compounds.

Unlike rivals Eclat Textile Co (儒鴻) and Toung Loong Textile Manufacturing Co (東隆興業), Lealea Group (力麗集團) is not yet able to make dyed nylon 66 yarn. However, the company expects to sign a contract with a global company for a technology transfer and make nylon 66 products by the end of June, said a company official, who declined to be named.

Construction of the factory is expected to be completed in early 2017 and will be capable of turning out 120 tonnes of nylon 66 products a day, the official said.

One-third of the nylon 66 products will be used by the company’s affiliate, Li Peng Enterprise Co (力鵬), to produce and dye nylon 66 fabrics, while Lealea Enterprise will sell the remaining output on the market, the official said.

Lealea Enterprise will also use NT$400 million of the planned expenditure to build a new polymerization plant, which is expected to be completed in the third quarter and increase its output of polyester chips by 400,000 tonnes a day, he said.

As for Li Peng Enterprise, it will spend a total of NT$3.7 billion this year and next year, including NT$2.2 billion to build a new factory that can produce 500 tonnes of nylon products a day, the official said.

Construction is expected to be completed by the fourth quarter next year, he said.

Another NT$900 million is to be used to rebuild its dyeing and finishing plant in Yangmei City (楊梅), Taoyuan County, for fabric processing, he said, adding that construction will be completed by the end of next year.

An analyst, who preferred to remain anonymous, forecast that after the capacity expansion projects are completed and assuming that all production lines are running at full capacity, Lealea Enterprise’s revenue could rise to between NT$21.5 billion and NT$22 billion a year, from NT$12.3 billion last year, while Li Peng’s sales could surge to about NT$48.5 billion a year from NT$26.4 billion last year.

“We will use our own money to finance the capacity expansion; as a result, both companies will not issue cash dividends this year,” the official said.

Lealea Enterprise will distribute a stock dividend of 5 percent this year, based on its earnings per share of NT$0.71 last year, while Li Peng will distribute a stock dividend of 10 percent this year, based on its earnings per share of NT$1.34 last year, according to the official.

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