St Shine Optical Co (精華光學), a contact lens contract manufacturer and brand vendor, is expected to see a double-digit percentage increase in year-on-year sales this quarter after three new production lines came online last month and a fourth is to follow by the end of this month, Yuanta Securities Investment Consulting Co (元大投顧) said in a note on Friday.
The New Taipei City-based company, which sells contact lenses under the Ticon (帝康) brand, reported combined sales of NT$995.86 million (US$34.14 million) in the first two months of this year, up 9.19 percent from a year earlier, and Yuanta said the firm’s first-quarter sales are likely to increase 13.5 percent year-on-year to NT$1.65 billion, but remain flat quarter-on-quarter.
“St Shine’s January-February sales were below expectations, mainly due to an unfavorable foreign exchange trend and fewer working days,” Yuanta analyst Lee Yi-hsin (李懿欣) said in the note.
“We expect sales in March to return to above NT$650 million, as the number of working days has returned to normal,” the statement added.
St Shine also does contact lens original design and equipment manufacturing services for several clients, including Japan’s Seed Co and Hoya Corp, as well as Bausch & Lomb Inc and Hubble Contacts in the US.
The company last year announced plans to invest more than NT$900 million to launch 20 new production lines to cope with the growing scale of its operations.
The timeline for the remaining production lines depends on staff recruitment, but St Shine expects all of them to start mass production by the end of the third quarter, with local Chinese-language media saying that they aim to meet demand from the company’s Japanese and US clients.
US sales accounted for 8 percent of last year’s total sales, up 507 percent year-on-year, and shipments to the US are expected to grow by 80 percent this year, accounting for 15 percent of overall sales, local media reported, citing a higher number of orders from Hubble Contacts.
Despite the unfavorable trend in foreign exchange rates, St Shine’s sales for this year are expected to increase 14.9 percent to NT$7.37 billion, after an annual decline of 0.63 percent last year, while earnings per share could reach NT$37.94, compared with NT$31.52 last year, after factoring in the effect of gross margin erosion due to the additional depreciation of the new production lines, Lee said.
St Shine on Friday posted a net profit of NT$396 million for last quarter, down 20 percent quarter-on-quarter, as gross margin fell from 40.9 percent to 38.8 percent over the period due to limited capacity and foreign exchange losses.
For the whole of last year, net profit dropped 10.6 percent to NT$1.59 billion, but the company’s board still decided to offer shareholders a cash dividend of NT$25 per share, representing a payout ratio of 79.31 percent.
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