Mon, Sep 10, 2018 - Page 16 News List

Feng Tay to see sales rise

By Chen Cheng-hui  /  Staff reporter

Feng Tay Enterprises Co (豐泰企業), a key supplier of Nike Inc, is expected to see further sales growth and improved profit margins in the second half of the year, driven by clear order visibility and larger economies of scale, SinoPac Securities Investment Service Corp (永豐投顧) said last week.

The firm’s manufacturing capacity could grow 10 percent next year upon the completion of new production lines in its Indian and Vietnamese plants, as existing plants are fully loaded, SinoPac said in a report on Wednesday last week.

“Earnings are likely to set another new high in the third quarter given the record-high third quarter unit sales guidance and New Taiwan dollar depreciation,” SinoPac analyst Iris Lin (林其美) said.

Feng Tay told an investors’ conference on July 19 that the company aims to sell 29 million pairs of shoes in the July-to-September quarter, up 14 percent from a year earlier.

The Yunlin County-based firm sold 54.88 million pairs of shoes in the first half of the year, up 10.9 percent annually.

Feng Tay’s revenue should reach NT$16.61 billion (US$539.7 million) in the third quarter, up 8.49 percent annually, and net profit should increase 20.92 percent to NT$1.53 billion, with earnings per share of NT$2.3 and operating margin of 12.38 percent, Lin said.

As the fourth quarter is a traditional peak season for the company, and new shoe products are to be launched, Feng Tay is expected to sell 30 million pairs, Lin said, adding that revenue could increase 9.59 percent annually to NT$17.16 billion and net profit should grow 28.73 percent to NT$1.55 billion, or NT$2.32 per share, with operating margin of 12.6 percent.

“Feng Tay stands to benefit over the long term from gradually increasing orders from Nike,” Lin said.

Feng Tay supplies about one-sixth of Nike footwear, while Nike-brand products — which include Converse — made up 87 percent of Feng Tay’s sales last year, Jih Sun Securities Investment Consulting Co (日盛投顧) data showed.

While Feng Tay is likely to continue to grow with Nike thanks to their solid relationship over the past four decades, concern over slower growth following a controversial advertisement by the US footwear and apparel maker last week cannot be overlooked, Jih Sun Securities Investment Consulting Co (日盛投顧) said in a separate note.

Nike shares last week fell 2.3 percent after the company on Wednesday released an ad featuring former San Francisco 49ers quarterback Colin Kaepernick, who sparked controversy in the US by kneeling during the US national anthem.

“The ad campaign has caused backlash and boycotts by some consumers in the US. It is unclear how Nike sales will be impacted in the long term, but for the short term, Feng Tay’s valuation would likely be affected,” Jih Sun analyst Channie Wang (王章妮) said on Thursday.

Feng Tay shares have surged 33.21 percent so far this year, closing at NT$180.5 on Friday in Taipei trading.

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