Mon, Dec 01, 2014 - Page 14 News List

Forecasts see Eclat Textile profit surge

LOYAL CUSTOMERS:Two securities houses predicted that the textile maker’s clients will enlarge their orders next year, which would see its net profit hit NT$3.22bn

By Camaron Kao  /  Staff reporter

Textile manufacturer Eclat Textile Co (儒鴻) is expected to post a 13.5 percent revenue increase next year on the back of rising orders from existing and new clients in Europe and North America, Jih Sun Securities Investment Consulting Co (日盛投顧) said last week.

The surge is forecast to boost Eclat’s revenue to NT$23.69 billion (US$763.51 million) from NT$20.95 billion this year, with orders from Nike Inc to rise by 12 percent, those from Under Armour Inc to increase by 30 percent and orders from Lululemon Athletica Inc to jump 14 percent, Jih Sun Securities analyst Jun Liao (廖景濬) said in a report issued on Tuesday last week.

The firm is expected to gain two new clients in Europe and three new in North America, Liao added in the report.

Sales to the five new clients would account for 8 to 12 percent of Eclat’s revenue next year, Waterland Securities Co (國票證券) said in a separate report issued on Friday.

A boost in orders would raise the utilization rate of Eclat’s new production lines in Vietnam’s Dong Nai Province, improving gross margin to 25.93 percent next year from 25.84 percent this year, Jih Sun Securities said.

Liao forecast that Eclat Textile will post a net profit of NT$3.22 billion next year, up 10.27 percent from NT$2.92 billion predicted for this year. Earnings per share will reach NT$12.88 next year, compared with NT$11.68 estimated for this year.

The company reported net profit of NT$865.97 million the past quarter, up 55.22 percent from NT$557.91 million in the previous quarter and 19.79 percent higher than the NT$722.92 million registered in the same period last year.

Eclat Textile’s earnings per share were NT$3.32 last quarter, compared with NT$2.22 in the second quarter and NT$2.88 per share in the third quarter of last year, according to the company’s filing with the Taiwan Stock Exchange.

The quarter-on-quarter profit increase was because of a low base level in the second quarter, when Lululemon, Nike, Under Armour and Gap Inc slashed their respective forecasts and orders, resulting in low utilization rate for the new production lines in Dong Nai Province, the textile maker said.

However, as the industry entered its traditional peak season last quarter, orders from Lululemon, Nike and Under Armour all rose from the second quarter, raising Eclat’s Textile gross margin to 25.68 percent from 25.01 percent the previous quarter, although the figure was still lower than the 28.54 percent recorded a year ago, the company’s stock exchange filing showed.

Jih Sun forecast that Eclat’s Textile revenue for this quarter would grow sequentially to a record high of NT$5.89 billion from the previous quarter because of rising orders from Nike and Costco Wholesale Co, with its gross margin set to hit 26 percent.

However, Waterland Securities said the firm’s gross margin for this quarter may drop or remain flat from last quarter despite a revenue increase because of lower sales for high gross margin apparels made of nylon 6-6 fabrics.

Eclat Textile shares closed at NT$308.5 on Friday in Taipei trading. They have fallen 8.18 percent since the beginning of the year, underperforming the broader market’s 6.68 percent increase over the same period, Taiwan Stock Exchange data show.

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