Tue, Jul 19, 2016 - Page 12 News List

Shares of sportswear makers rally ahead of Olympics

By Kuo Chia-erh  /  Staff reporter

Shares of Eclat Textile Co (儒鴻), which supplies fabric and sports apparel to Nike Inc, rose 7.66 percent yesterday as the Rio de Janeiro Olympics near.

The Games, set to begin on Aug. 5, are expected to boost demand for sports clothes and shoes, which yesterday triggered buying in Olympics concept stocks such as textile suppliers, sports apparel makers and shoemakers.

Eclat shares rose to NT$365.5, reaching their highest since April 29’s closing price of NT$368.5, outperforming the TAIEX, which edged up 0.65 percent.

Shares of Makalot Industrial Co (聚陽實業), which makes sportswear for Nike and Adidas, rose 1.47 percent to NT$172, while shares of footwear manufacturer Pou Chen Corp (寶成工業) climbed 1.71 percent.

Eclat expects sales to grow in the second half of this year from the first half’s NT$11.42 billion (US$356.6 million), benefiting from the industry’s expected annual growth of between 10 and 15 percent this year, chairman Hung Chen-hai (洪鎮海) said in a shareholders’ meeting last month.

Hung said inventory adjustment by the company’s major clients is going to stabilize this quarter, after drastic inventory digestion that started at the end of last year.

Sales in the coming quarters will outpace the first quarter and the uptrend will quicken its pace in the fourth quarter, he said.

The company aims to develop new products based on its expertise in functional fabrics to boost orders, he said.

With the innovative products, the average price of fabric is expected to grow between 10 and 15 percent this year, Hung said.

Overall industry demand is expected to improve in the second half of this year due to Eclat’s diversified client base, Daiwa Capital Markets analyst Helen Chien (簡君穎) said in a report released this month.

“We forecast the company’s gross margin will improve to between 27 and 29 percent in the following quarters due to its new product pipeline, rising utilization and favorable product mix,” Chien said.

Eclat expects last quarter’s gross margin to improve from the first quarter’s 26.7 percent to 27.7 percent.

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