St Shine Optical Co Ltd (精華光學), the nation’s biggest contact lens maker, this week reported that its earnings surged 53 percent annually in the second quarter due to rising orders from a Japanese client and favorable foreign-exchange rates.
Net profit expanded to NT$440.03 million (US$14.01 million) in the April-to-June period from NT$287.59 million a year earlier, with earnings per share rising to NT$8.73 from NT$5.7 over the same period, the company said.
Consolidated sales rose 11 percent year-on-year to NT$1.55 billion in the second quarter, while gross margin of 43.52 percent and operating margin of 35.82 percent improved from 33.06 percent and 25.59 percent respectively from the same period last year, data showed.
The company’s performance in the second quarter helped net profit for the first half of the year increase 47.65 percent annually to NT$848 million, or earnings per share of NT$16.83, with sales rising 1.7 percent to NT$3.06 billion. Gross margin was 42.71 percent and operating margin hit 35.1 percent during the first six months, company data showed.
Daiwa Capital Markets Inc said St Shine’s first-half results showed that the company achieved stronger-than-expected sales in Japan, especially from SEED Co Ltd, but at the same time it had witnessed slowing momentum in China due to inventory digestion on clients’ side.
The brokerage forecast a positive margin outlook for St Shine in the next few quarters, due to the stabilization of the Japanese yen and the firm’s high utilization rate, which is about 95 percent.
“The company’s gross margin is anticipated to widen to 43 percent at the end of this year, improving markedly from the trough of 36.9 percent last year,” Daiwa said in a note on Monday.
HSBC Securities Taiwan Corp said in a separate note that it remained concerned about downside risks ahead in the Japanese and Chinese markets.
In Japan, SEED has set a lower sales growth of 3 percent for its contact lens business — which is outsourced to St Shine — for the fiscal year ending in March next year, compared with a 15 percent growth target in 2014 and last fiscal year, and 67 percent in the 2013 fiscal year, HSBC said.
The brokerage also said it did not expect strong growth in the Chinese market this year, after St Shine’s China sales declined 50 percent year-on-year in the first half.
HSBC forecast that the Chinese market would grow at a moderate percentage in the mid to low teens.
“We believe St Shine is a well-managed company with a solid financial background. The ups and downs of order visibility are a swing factor to the profit and loss of OEMs such as St Shine,” HSBC said in a note issued on Wednesday.
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