Textile and garment manufacturer Eclat Textile Co (儒鴻) could see a nearly 15 percent annual increase in revenue this year, driven by increasing orders from its brand clients, Yuanta Securities Investment Consulting Co (元大投顧) said.
“Brand clients, such as Lululemon Athletica Inc, Gap Inc and Nike Inc, are likely to increase their sales contribution [to Eclat] this year,” Yuanta analyst Peggy Shih (施姵帆) said in a client note on Tuesday last week.
Computer jacquard fabric, one of its high-priced products, is also expected to see its sales contribution increase to 10 percent this year from a single-digit percentage last year, the note said.
Eclat’s continued capacity expansion in Vietnam would further lend support to the company’s operations this year, as its two new garment factories are expected to make a significant revenue contribution in the second quarter of the year.
The company is planning to recruit more workers at the two new plants in the second quarter to boost utilization rates, Eclat officials told an investor conference last week.
The two Vietnamese plants, which began operating at the end of last year, would eventually be capable of producing 1.3 million units of clothing per month, Eclat said.
That translates into a monthly sales contribution of NT$324 million (US$11.11 million), according to Yuanta’s estimate.
Yuanta expects Eclat’s gross margin to gain 1.2 percentage points this year, thanks to the company’s move to vertically integrate its fabric and clothing operations.
The company plans to use more of its own fabrics for garment manufacturing to reduce production costs and boost profitability.
It expects to supply more than 40 percent of the fabrics used in its garment manufacturing this quarter, up from about 32 percent at the beginning of last year.
The company also plans to invest US$11 million to expand the capacity of its Vietnamese fabric plant, in a bid to meet growing customer demand.
Once fully operational in the fourth quarter, the facility would be able to produce 250,000 kilograms of fabrics per month, Eclat said earlier this month.
Combined revenue in the first two months of the year was NT$4.13 billion, up 22.58 percent from NT$3.37 billion in the same period last year.
Eclat shares rose 1.48 percent to close at NT$342 in Taipei trading yesterday, beating the broader market.
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