Mon, Jan 12, 2015 page13

• Textile firms to see strong performance

  FASHIONABLE FUNCTIONALITY: Analysts said that emphasis on high-end functional fabrics combined with a robust US market will drive growth for both Eclat and Makalot

  • By Lauly Li / Staff reporter
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  The nation’s two biggest textile manufacturers, Eclat Textile Co (儒鴻) and Makalot Industrial Co (聚陽), are expected to post robust performances this year due to growing orders from clients, analysts said last week.

  Taiwanese textile makers have focused on high-end functional fabrics and are good at completing small orders with a high level of variety, they said. As global demand for high-end functional apparel is higher than for mid-priced products, analysts predicted that local companies will benefit from an industry trend toward more expensive premium products, as well as market emphasis on more fashionable designs and functional fabrics.

  “We expect Eclat to resume top-line growth momentum this year, thanks to increasing client order allocation and its improving channel inventory conditions,” Deutsche Bank analyst Joelian Tseng (曾慧瓊) said in a client note released on Thursday.

  Tseng’s comment came after Eclat posted weaker-than-expected sales totaling NT$5.77 billion (US$180.3 million) last quarter, which were up 1.4 percent from the previous quarter and 7.64 percent year-on-year, but 4.4 percent lower than Deutsche Bank’s estimates due to fewer orders.

  For the whole of last year, Eclat’s total sales grew 14.9 percent annually to NT$20.84 billion, after posting more than 25 percent growth for four consecutive years.

  It was the first time the company made more than NT$20 billion in annual revenue. Tseng said the company’s order outlook remains very robust for this year, with sales likely rise 27 percent from last year.

  Eclat is also expected to deliver steady gross margin improvements for last quarter and this quarter through enhanced worker efficiency and production yield rates, Tseng said.

  “The efficiency and production yield at Eclat’s new plants is advancing in line with the company’s expectations,” Tseng said, adding that the firm’s earnings growth momentum should accelerate this quarter.

  Citing Eclat’s management, Tseng said the company would not see significant impact on its gross margin from the minimum wage rise in Cambodia because of its low capacity exposure to the country.

  Separately, SinoPac Securites Co (永豐金證券) also holds a positive view for Makalot’s outlook this year, saying that the US’ robust economy would directly benefit the company, because 80 percent of its revenue comes from the US market.

  “Given that the prospects for Makalot’s client orders look optimistic, we foresee that the company’s performance this year will continue to rise,” SinoPac analyst Fion Chen (陳奕均) said in a client note released on Friday.

  Chen said she expects Makalot’s growth momentum to be driven in tandem with its major US clients’ strong performance, leading the company’s shipments this year to grow by 10 to 15 percent year-on-year.

  Moreover, Chen said that as one of Makalot’s Japanese clients has been expanding its overseas stores over the past few years, she expects Makalot, as the Japanese client’s biggest supplier, to get an increased number of orders this year.

  Last year, the firm’s consolidated revenue totaled NT$20.88 billion, up 16.63 percent from 2013. SinoPac expects Makalot’s annual revenue to grow 11.7 percent to NT$23.32 billion by the end of this year.

  Eclat shares rose 0.65 percent to NT$311.5 on Friday in Taipei trading, while Makalot shares rose 2.29 percent to NT$178.5.
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