Taiwan Paiho Ltd (台灣百和) shares have outperformed the local main bourse by nearly 28 percent so far this year, reflecting investor optimism about robust contributions from the company’s new products.
It also indicates positive market sentiment toward the company’s growth potential this year, driven by the strong revenue growth for elastic tapes, molded hooks and shoelaces.
Established in 1985, Taiwan Paiho’s products are auxiliary materials used in ready-to-wear apparel and footwear like webbing, touch fasteners, elastic tapes, molded hooks and shoelaces. The company’s clients are well-known brands such as Nike, Adidas, New Balance, Nautica and Columbia.
In the first four months of the year, the sports goods and apparel accessories maker reported an annual increase of 44.1 percent in net income to NT$532.69 million (US$16.51 million), with earnings per share rising to NT$1.72 from NT$1.24 a year ago.
Aggregate sales grew 11.5 percent year-on-year to NT$3.45 billion from January to last month, thanks to contribution from the four-way stretchable elastics for Adidas and Clarks orders, as well as accessories for HTC Corp’s (宏達電) Vive virtual-reality (VR) headset, the company said this week.
Taiwan Paiho has joined the supply chain of HTC’s wearable business to provide elastic jacquard, molded hooks and foam processing for its VR products this year, with shipments expecting to reach between 50,000 and 60,000 units per month this quarter and between 70,000 and 100,000 units per month from July, the company said.
Besides the partnership with HTC, the company is also in discussions with other potential VR clients, trying out a small number of orders, according to a client note Daiwa Capital Markets Inc issued on Thursday.
With rising popularity of Nike’s Flyknit technology, which allows sports footwear for a skin-like fit, maximum breathability and minimum waste, Paiho’s one-piece seamless upper and four-way stretchable elastic designs have secured new orders from Adidas, New Balance and Under Armour, which should start sales contribution in the second half of this year, Daiwa said.
Given the growing demands of its four-way stretchable elastics, Paiho is planning to increase the number of machines for producing the kind of product from last year’s 32 units to 42 units this quarter, totaling 122 units by the end of this year, the company said.
Shares of Paiho closed 1.23 percent higher at NT$90.6 yesterday in Taipei trading. They have risen 24.45 percent so far this year, compared with the broader market’s decline of 3.41 percent over the period, Taiwan Stock Exchange data showed.
Separately, Feng Tay Enterprises Co (豐泰企業), which supplies about a sixth of Nike’s footwear, reported on Thursday that its net income for the first four months of this year increased 16.31 percent annually to NT$1.3 billion, with earnings per share climbing from NT$1.94 to NT$2.19 over the same period.
The company attributed the positive results to the steady order growth from Nike and Converse, as well as the relatively stable New Taiwan dollar versus the US dollar last month.
Shares of Feng Tay surged 3.64 percent to close at NT$128.
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