New orders from Nike Inc are expected to boost prospects this year for Taiwan Paiho Ltd (台灣百和), ending a slump for the supplier of shoelaces, elastic tape and fasteners for global sports brands, analysts said last week.
Paiho has started development of the new products for the US client and is expected to receive orders later this year, Jih Sun Securities Investment Consulting Co (日盛投顧) said in a research note on Friday.
The company might receive rush orders from the client in the second quarter, with major orders likely coming in the fourth quarter, Jih Sun said.
The 34-year-old company, based in Changhua County, produces accessories used in ready-to-wear apparel and footwear such as webbing, touch fasteners, elastic tapes, molded hooks and shoelaces, and its customers include well-known brands such as Nike Inc, Adidas AG, Under Armour Inc, Puma AG and New Balance Athletic Shoe Inc.
Paiho launched several new projects last year, such as one-piece shoe uppers featuring transparent materials and 3D embossed patterns, as well as new four-way stretch products that include a wider range of specifications. It also widened the scope of its apparel applications to include side stripes for tops and pants, while capacity for engineered knitted jacquard mesh at Vietnam Paihong Ltd (越南百宏) was launched in June.
“The company expects sales of one-piece uppers to increase 10 to 20 percent year-on-year this year, with a gross margin of 25 percent, and four-way stretch sales to grow 8 to 10 percent, with a gross margin of 20 percent. We believe the growth momentum for the company’s one-piece uppers and four-way stretches would likely see a substantial recovery this year, but further observation is needed to determine their actual contribution,” Jih Sun analyst Channie Wang (王章妮) said.
Jih Sun forecast Paiho’s overall revenue this year would grow 12.74 percent annually to NT$15.41 billion (US$499.64 million). Net profit is predicted to increase 11.11 percent to NT$1.49 billion, with earnings per share (EPS) of NT$4.99, the securities company said in its note.
KGI Securities Investment Advisory Co (凱基投顧) is also positive on Paiho’s outlook, saying the company remains on its top-pick list in the apparel and footwear space, despite last year’s operations trailing expectations.
Paiho on Tuesday reported unaudited net profit plunged 17.43 percent annually to NT$1.34 billion last year, with EPS falling from NT$5.44 to NT$4.49.
Due to falling sales of one-piece uppers and four-way tapes, declining prices for webbing and shoelace items, and depreciation expenses for old equipment, operating income dropped 11.81 percent year-on-year to NT$2.36 billion, Paiho said in a regulatory filing.
Consolidated revenue for last year grew by 16.34 percent year-on-year to NT$13.67 billion, mainly driven by subsidiary Paiho Shih Holdings Corp’s (百和興業) construction business in China at the end of the year, Paiho said.
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