Mon, Jun 11, 2018 - Page 15 News List

Added capacity to drive Eclat Textile sales growth

MOMENTUM:The company’s fabric manufacturing capacity per month is expected to increase from 2.6 million kilograms to 2.9 million kilograms

By Kuo Chia-erh  /  Staff reporter

A steady recovery in end-market demand and the gradual addition of new capacity are expected to create significant growth momentum for Eclat Textile Co (儒鴻) this year, despite sales declining last month, Fubon Securities Investment Services Co (富邦投顧) said in a note on Friday last week.

“Increasing utilization at Eclat Textiles’ new garment factories in Vietnam will be a key driver to company sales growth moving forward,” Fubon Securities analyst Fang Chin-yuan (方錦源) said in the note.

Eclat, which supplies functional and flexible knitwear fabrics, as well as garment products, aims to increase utilization at its garment plants by 80 to 90 percent in the second quarter, he said.

With the addition of new production lines, the company’s overall garment capacity is forecast to increase by about 20 percent — or 1.3 million pieces — to 7.5 million pieces per month, Fang said.

With the gradual increase in capacity at its fabric plants in Vietnam in the next quarter and the company becoming fully operational in the fourth quarter, Eclat’s overall fabric manufacturing capacity per month is expected to increase from 2.6 million kilograms to 2.9 million kilograms, he said.

The company’s revenue last month rose 16.49 percent to NT$2.31 billion (US$77.48 million) from a year earlier, marking a fifth consecutive month of double-digit percentage growth, but declined 0.06 percent from the previous month, it said on Thursday last week.

From January through last month, aggregate revenue grew 25.59 percent annually to NT$11.2 billion, but the increase declined from the 28.19 percent growth seen in the first four months, company data showed.

Leading down jacket supplier Quang Viet Enterprise Co (廣越) posted a record-high revenue of NT$1.02 billion for last month, up 58.5 percent from a year earlier, with cumulative revenue in the first five months totaling NT$2.68 billion, an annual increase of 52.34 percent, the company said in a statement on Thursday.

The strong growth was thanks to increasing customer demand from major clients, including Nike Inc, Adidas AG and North Face Inc, Quang Viet president Charles Wu (吳朝筆) said.

Revenue also gained support from orders placed by a new brand client, Norway-based sportswear company Helly Hansen, Wu said.

The company said it expects a higher gross margin this year due to it increasing average product prices by more than 3 percent to reflect rising production costs.

As the industry enters a stronger season and the company’s capacity increases thanks to newly acquired businesses, Quang Viet’s shipments this year are expected to increase 4.8 percent annually to 11 million pieces, Fubon Securities said.

Meanwhile, apparel maker Makalot Industrial Co (聚陽) posted revenue of NT$1.47 billion last month, up 12.6 percent from NT$1.31 billion a year earlier, meeting market expectations, but cumulative revenue in the first five months edged down 0.95 percent annually to NT$8.22 billion.

“As peak-season shipments are transitioning from spring/summer apparel to autumn/winter apparel in the second quarter and the company’s revenue momentum comes from additional orders from clients and advance orders, Makalot’s revenue growth is likely to decline this month,” Capital Investment Management Corp (群益投顧) analyst Jesta Wu (吳修廉) said in a note on Thursday.

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