Makalot Industrial Co (聚陽), a diversified garment manufacturer for global brands and major clothing retailers, saw its shares outperform the broader market yesterday after the company resumed operations in Vietnam on Friday last week.
While the company’s factories in the Cu Chi District of Ho Chi Minh City were not been damaged in the recent protests and rioting in Vietnam, earnings are likely to be affected by the increased risks associated with Vietnam and the potential share placement, Daiwa Capital Markets said.
“We will monitor the situation in its operations, given that Vietnam is the company’s second-largest production location,” Daiwa analysts Helen Chien and Mark Chang (張靖坤) said in a research note on Friday.
Makalot’s operations in Vietnam accounted for 26 percent of its NT$17.91 billion (US$593.3 million) in revenue last year. The figure is estimated to rise to 30 percent this year, Daiwa said.
Makalot shares opened higher in Taipei trading yesterday and hit an intraday high of NT$155.
At the end of Taiwan Stock Exchange trading, the stock closed at NT$154, up 1.32 percent from Friday and outpacing a 0.13 percent rise on the benchmark TAIEX.
On May 8, Makalot said that it was planning to raise capital by issuing 20 million new common shares to expand its capacity.
The firm’s board of directors also approved a plan to increase its cash dividend payout to NT$7.7 per share from the original announcement of NT$7.2, Makalot said in a stock exchange filing.
The adjusted cash dividend represents a payout ratio of about 96 percent based on last year’s earnings per share of NT$8.025.
“Although Makalot raised its cash dividend payout ratio to 96 percent from 90 percent, which favors current shareholders, we are still concerned about the share dilution on long-term investors,” Chien and Chang said in the note.
The rights issue represents 11.8 percent of current outstanding shares, or 10.5 percent dilution of current share capital, Macquarie Capital Securities Ltd estimated earlier.
Makalot reported sales of NT$1.45 billion last month, up 6.84 percent year-on-year, but down 12.62 percent month-on-month.
During the first quarter of this year, net income grew 26.83 percent annually and nearly 61 percent quarterly to NT$489.37 million, or NT$2.87 per share, company data showed.
Daiwa has lowered shipment growth forecasts for the company to 15 percent annually between this year and 2016, from between 16 and 18 percent estimated earlier, and cut its earnings forecasts by between 4.3 percent and 5.1 percent over these three years.
Both Daiwa and Macquarie have offered their target price on the stock at NT$162.