Green Seal Holding Co (綠悅), which manufactures biaxial-oriented polyamide (BOPA) film used in food packaging, has continued to see a downward spiral in its stock price this year, reflecting investors’ disappointment with the company’s lackluster operating performance.
Green Seal shares on Friday fell 4.56 percent to a record low of NT$50.2 in Taipei trading.
So far this year, the Cayman Islands-incorporated company’s stock has plunged 65.5 percent, compared with the broader market’s 14.56 percent rise over the period, Taiwan Stock Exchange data showed.
In China, Green Seal is the largest supplier of BOPA film, which is also used in packaging for household products, medicine and electronics due to its flexibility and resistance to being punctured and friction.
However, the company’s BOPA prices started to fall in April due to a substantial drop in raw material prices, while a decline in its shipment volume and competition from Chinese rivals also posed a challenge.
“Competition in China’s BOPA market has intensified since last quarter, when some Chinese rivals began to expand capacity,” Green Seal said in a statement on Nov. 10.
Average prices of the company’s products last quarter decreased 9.24 percent from the second quarter, while its shipment volume also dropped by 26.06 percent, the company said.
Last quarter, Green Seal’s net profit plummeted 79.98 percent annually to NT$88.67 million (US$2.95 million) with earnings per share (EPS) of NT$0.54, while sales decreased 36 percent year-on-year to NT$1.12 billion and gross margin fell to 7.61 percent from 38.16 percent, the company’s financial statement released on Nov. 10 said.
The company reported a 41.22 percent annual decline in net income to NT$759 million over the first three quarters, with EPS of NT$4.64. Average gross margin was 24.5 percent over the nine-month period, down 13.58 percent from a year ago.
Despite the weak earnings performance, the company forecast increases in its product prices and shipment volume for this quarter, given an upward trend in global BOPA film prices.
To distinguish itself from its competitors, Green Seal aims to lift revenue contribution of its high-margin products — including EHA film, which has low oxygen permeability — as its Chinese rivals currently lack the ability to produce such products.
The firm last month inked a procurement contract with Germany-based equipment supplier Bruckner Maschinenbau GmbH & Co KG in a bid to increase its capacity to produce high-end products.
Installation of a linear motor simultaneous stretching production line bought from Bruckner is scheduled to start next month and begin mass production in the fourth quarter of 2019, which would help increase Green Seal’s capacity to produce high-end products to 58,000 tonnes per year, up from 22,000 tonnes.
It would also boost total capacity to 100,000 tonnes per year, Green Seal said.
While deployment of new production lines and products might catalyze the company’s revenue and earnings in the long term, immediate benefits might not emerge, analysts said.
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