Makalot Industrial Co (聚陽), a diversified garment manufacturer for global brands and major clothing retailers, yesterday unveiled a three-year plan to invest between US$10 million and US$15 million per year building new textile plants in Vietnam.
Company chairman Frank Chou (周理平) told an investors’ conference that the company has its eye on the potential zero-tariff benefits brought by Vietnam’s free-trade talks with the EU and its involvement in the proposed Trans-Pacific Partnership (TPP), and decided to expand production capacity in the country.
“As of November, Vietnam has surpassed Indonesia to become Makalot’s largest production area, accounting for 32 percent of the firm’s total capacity,” Chou said.
Indonesia accounted for 30 percent of the firm’s total capacity, Cambodia 24 percent and China and the Philippines 6 percent each, he added.
From January through last month, Makalot posted a consolidated revenue of NT$19.26 billion (US$615.4 million), up 15.9 percent from a year earlier. The company's pre-tax income grew 25.9 percent year-on-year to NT$1.91 billion in the first 11 months of the year, company data showed.
With full-year sales expected to top NT$20 billion, the company plans to offer its employees an annual bonus of more than 12 months, Chou said.
SinoPac Securities Investment Service Corp (永豐投顧) forecast that Makalot’s revenue would hit NT$20.79 billion this year, rising 16.1 percent from last year, and net profit would reach NT$1.72 billion, rising 28.1 percent.
Makalot shares rose 0.63 percent yesterday to NT$158.50, outpacing the broader market, which fell 0.39 percent, Taiwan Stock Exchange data showed.
Chou told investors that the company plans to build a new factory in northern Vietnam and another in the south — both of which are scheduled to start operations in the first quarter of 2016.
“We expect our units in Vietnam to account for 40 to 45 percent of our total capacity by 2017,” he said.
The company also plans to further expand its production capacities in Indonesia and Cambodia.
“Cambodia is a very important production area for Makalot because the country also enjoys zero tariffs in European countries and Canada,” Chou said.
For next year, Makalot plans to continue improving its product mix and client base in a bid to enhance its profitability, Chou said.
The company expects functional clothing to be the main growth driver, saying that global sportswear and fashion brands see it as the dominant market trend in the next few years.
The company is likely to see between 30 percent and 50 percent sales growth next year for functional clothing, including thermal insulation apparel and yoga or jogging outfits, he said.
Makalot chief marketing officer David Lieu (廖維) said that the company’s three major clients are US brands, which account for about 64 percent of its total revenue.
“Japanese clients take 6 to 7 percent of the total revenue, but we expect to see their revenue contribution rise to 10 percent by 2017,” Lieu said.
“Although the Japanese market presents cultural and language challenges, we will continue working on breaking into this market in the next few years,” Lieu said.
However, Makalot’s business development in Europe is relatively slow compared with the US and Japanese markets, because only its Cambodian operations enjoy tariff benefits in Europe, he said.
“We believe Makalot will have an advantage in the European market after Vietnam inks a free-trade agreement with the EU,” Lieu said.
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