Taiwanese nylon maker Chain Yarn Co (展頌) is set to debut shares today on the Emerging Stock Market — a preparatory board for the nation’s two main bourses — and will use the funds raised to expand nylon filament production next year.
The Taichung-based manufacturer is one of six companies that are scheduled to start trading shares on the Emerging Stock Market this week.
EMERGING FIRMS
The other five are bulk shipping firm Kuang Ming Shipping Corp (光明海運), LED lighting company Excellence Optoelectronic Inc (聯嘉光電), barcode printer manufacturer Godex International Co (科誠), WiMAX operator Vee Time Corp (威達雲端電訊) and storage solution provider Thecus Technology Corp (宏普科技).
Trading on the Emerging Stock Market is restricted to securities firms, by means of negotiations, and therefore are not open to public subscription.
CAPITAL EXPANSION
However, an increasing number of local firms have plans to file for listing applications to tap into capital markets that are expanding thanks to a recovering economy, which the government forecast would grow by 9.98 percent this year compared with a contraction of 1.91 percent last year.
GRETAI Securities Market, which oversees the Emerging Stock Market, said last week it expects to receive more than 100 applications for listing on the preparatory bourse this year.
That number, if achieved, will be a five-year high. There were only 54 applications filed last year, compared with a peak in 2004 of 115 applications, the over-the-counter market said.
In a briefing to investors last week, Chain Yarn president Huang Cheng-yu (黃呈玉) said after listing on the Emerging Stock Market the company plans to apply for official listing on either the Taiwan Stock Exchange or the GRETAI Securities Market by May next year.
Established in May 1988, Chain Yarn has production facilities in Douliu Township (斗六), Yunlin County, and Jhushan Township (竹山), Nantou County. It also owns a branch in Hangzhou, China.
Big customers
The textile manufacturer offers nylon to a number of overseas clients including sporting goods firms North Face Inc, Patagonia Inc, Adidas AG and luggage maker Samsonite Corp.
Nylon is a synthetic polymer commonly used in fabric. It has also been widely applied in parachutes, flak vests, vehicle tires, bridal veils, carpets, musical strings and rope.
According to the company’s statistics, in the first half of the year, nylon filament sales made up 55 percent of the company’s total sales, up 48 percent from last year. Sales contribution from nylon chips, meanwhile, dropped to 40 percent from last year’s 48 percent.
MONTHLY TONNAGE
The change in proportion came after the company this year established a new production line that is capable of churning out 1,200 tonnes a month of nylon filament — raw materials that offer higher profit margins than nylon chips.
The company plans to set up a new nylon filament production line next year, which will boost monthly capacity by another 600 tonnes.
Chain Yarn made a net profit of NT$170 million (US$5.5 million) in the first six months of this year, or NT$1.29 earnings per share, on a revenue of NT$3.8 billion.
Last year, net profit was NT$169 million, or NT$1.28 earnings per share, on a revenue of NT$6.6 billion. Gross margin was 8.4 percent in the first six months, compared with 6.09 percent last year.
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