Shihlin Electric & Engineering Corp (士林電機) yesterday said that it will build a new production site in China because it has to move from its current site in Changzhou, Jiangsu Province, due to the local government’s urban renewal plans.
The Taipei-based company, which makes electrical devices, said the new facility would have double the capacity of its present factory in Changzhou, and it is expected to be operational by the end of 2017.
Chief operations officer John Hsieh (謝漢章) told an investors’ conference that the new facility would produce an estimated NT$4 billion (US$133.2 million) in annual sales.
The Changzhou factory, which is jointly owned with Japan’s Mitsubishi Electric Corp, generates annual sales of NT$2 billion, Hsieh said.
It is one of nine production sites the company has in China.
The company is also conducting a study for a new factory in Vietnam to accommodate growing demand, Hsieh said.
The company’s two existing factories in Vietnam’s Dong Nai Province contribute NT$400 million to NT$500 million in sales a year when operating at full capacity, but the company will soon face a capacity constraint because sales in Vietnam are increasing by about 35 percent a year, he said.
“The new [Vietnamese] factory will serve as a base for the company to enter Southeast Asian markets, and we are looking for a site that is close to a highway and a harbor,” Hsieh said.
Another new factory in Suzhou, China, will become operational next month, and it is expected to generate 180 million yuan (US$29.34 million) a year initially, Hsieh said, adding that the figure is forecast to rise to 400 million yuan a year in the long term.
From January through last month, the company reported revenue of NT$12.82 billion, up 1.93 percent from NT$12.58 billion for the same period the previous year, a company filing with the Taiwan Stock Exchange showed.
In the first half of this year, the company posted a net profit of NT$618.43 million, up 23.82 percent from NT$499.44 million a year ago, which Hsieh attributed to the growing number of sales of its transformers for wind farms in the US and Canada.
For this year and the next two years, the company hopes it can achieve an annual 10 percent increase in profit, Hsieh said.
As a result, the company’s payout ratio will increase to 67 percent next year from 62.2 percent this year, given that it achieves its profit increase this year, Hsieh added.
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