Apparel maker Makalot Industrial Co (聚陽) is expected to post increased revenue and earnings this year, partly supported by increasing orders from Wal-Mart Stores Inc, Jih Sun Securities Investment Consulting Co (日盛投顧) said on Thursday.
Revenue is forecast to rise 6.5 percent annually to NT$2.38 billion (US$81.78 million) this year, as sales generated by the US retail giant might grow by a double-digit percentage annually, Jih Sun analyst Channie Wang (王章妮) said in a note.
In addition, other new brand customers, including Hennes & Mauritz AB (H&M) and Oakley Inc, would begin making contributions to Makalot’s revenue this year, Wang said.
Makalot’s net profit is expected to approach NT$1.55 billion this year, a 19.2 percent annual increase, with earnings per share of NT$7.38, Jih Sun forecast.
The company on Jan. 17 reported a pre-tax profit of NT$1.62 billion for the whole of last year, a 15.3 percent decline from the previous year. Despite that, cumulative revenue rose 1.12 percent annually from NT$22.13 billion to NT$22.38 billion.
Pre-tax earnings per share were NT$7.77, compared with NT$9.26 a year earlier, the company said.
Makalot attributed the weak earnings performance to slow sales in the beginning of last year, adding that demand started to recover in the second half.
The strong New Taiwan dollar might continue to weigh on the export-reliant firm’s sales growth this year, Yuanta Securities Investment Consulting Co (元大投顧) said.
“We project a negative foreign-exchange effect of between 3 and 4 percent on the company’s sales growth this year, assuming the appreciation of the NT dollar against the greenback,” Yuanta analyst Peggy Shih (施姵帆) said in a separate note.
In light of the foreign-exchange risks, Yuanta said it has downgraded its earnings estimate for Makalot by 5 percent.
However, Makalot’s gross margin will likely expand by 0.5 percentage points this year, thanks to a better product portfolio, the brokerage said.
The company is also expected to see sales growth of between 15 and 20 percent in the high-margin functional wear sector, which is expected to account for between 25 and 27 percent of total sales this year, the brokerage added.
Shares in Makalot closed at NT$135.5 in Taipei trading on Friday, up 0.74 percent from the previous session.
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