Due to robust market demand in Taiwan and the gradual stabilization of its Vietnamese unit, Tung Ho Steel Enterprise Corp (東和鋼鐵) is expected to have a better growth outlook next year than its local peers, Capital Investment Management Corp (群益投顧) said in a note on Monday.
Tung Ho is an integrated electric furnace steel manufacturer with a product mix of rebar, H-beams, billets, steel structures and plates.
A steady increase in the permitted gross floor area for building is buoying demand for construction steel and especially benefits Tung Ho, the nation’s largest construction steelmaker, Capital Investment said.
The gross floor area covered by building permits grew 9.98 percent year-on-year to 29.918 million square meters in the first 10 months of this year, Directorate-General of Budget, Accounting and Statistics data showed.
The total permitted floor area is forecast to exceed 35 million square meters this year — the third-highest since 2011, Capital Investment said.
Building permits are seen as an important gauge of property developers’ investment appetite and overall property market sentiment.
The permitted gross floor area bottomed out in 2016 after the government introduced a series of unfavorable policies, but the situation has gradually improved, and market sentiment this year was particularly boosted by firms returning from China to avoid US tariffs on Chinese goods.
Tung Ho’s revenue from the Taiwanese market increased by 22.26 percent year-on-year to NT$27.47 billion (US$909.5 million) in the first three quarters of the year, partly due to significant contributions from rebar and H-beam products, Capital Investment said.
Although the firm’s Vietnamese unit, Tung Ho Steel Vietnam Corp (THSVC), has failed to expand its business in the short term as expected, market demand in the Southeast Asian country has grown rapidly, showing strong long-term growth momentum, Capital Investment said.
As a result, the firm’s consolidated revenue is forecast to increase 6.21 percent to NT$47.3 billion next year and net profit could grow 21.67 percent to NT$1.73 billion, with earnings per share of NT$1.72, Capital Investment said.
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