Shares of St Shine Optical Co Ltd (精華光學) dropped nearly limit down for a second day yesterday after the company reported disappointing revenues for last quarter.
The stock of the contact lens manufacturer plummeted 6.97 percent to NT$560 yesterday, underperforming the GRETAI index, which was down 1.47 percent.
St Shine reported a revenue of NT$1.33 billion (US$43.8 million) last quarter, down 3.34 percent from NT$1.38 billion a year ago and 1.99 percent less than the NT$1.36 billion in the previous quarter, the company said in a stock exchange filing.
The figure missed the company’s guidance of 0.5 percent year-on-year growth because of more severe competition in Taiwan and a market slowdown in Japan.
It was also weaker than Credit Suisse Group AG’s forecast of an increase of between 5 percent and 10 percent from a year earlier.
“The company’s revenue decline last quarter was because our competitor, Johnson & Johnson Vision Care Inc, cut the prices of its contact lenses by more than 15 percent for a promotion in Taiwan, and St Shine’s Japanese clients reduced their purchase,” St Shine deputy manager Carol Chou (周華玲) told the Taipei Times.
Sales in Taiwan accounted for 24.31 percent of the company’s revenue of NT$5.22 billion last year, while sales in Japan accounted for 55 percent, Chou said.
Jih Sun Securities Investment Consulting Co (日盛投顧) forecast that St Shine’s gross margin would decline to 42.1 percent last quarter from 44.07 percent in the previous quarter, because of intensifying price competition in Taiwan and the depreciation of the Japanese yen.
The falling yen forced St Shine to lower its prices for Japanese clients in the past quarter, affecting the company’s profitability, Jih Sun Securities said in a report yesterday.
The brokerage estimated that St Shine would post a profit of NT$380 million, or NT$7.47 per share, for last quarter, up 2.13 percent from NT$372.09 million, or NT$7.38 per share, the previous quarter.
For this quarter, St Shine is forecast to report revenue of NT$1.36 billion, as the company has no plans for promotions in Taiwan, while its Japanese clients may initiate promotion activities to reduce inventory levels, Jih Sun Securities said.
However, Credit Suisse was more optimistic about the company’s outlook this quarter, according to a report it issued on Wednesday.
Credit Suisse said that although consumers in Japan purchased large quantities of contact lenses before the nation’s consumption tax increase in April and reduced their purchases afterward, as the standard buying cycle for disposable contact lenses is between three and six months, customers are expected to increase their purchases this quarter.
Credit Suisse forecast that St Shine’s revenue would rise 8 percent to NT$1.51 billion this quarter compared with last quarter.
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