The outlook for St Shine Optical Co Ltd (精華光學) in the long term remains positive, even though contact lens contract manufacturers and brand vendors have lately encountered a hiccup in sales growth and a share price correction, SinoPac Securities Investment Service (永豐投顧) said on Friday last week.
“St Shine’s sales came below market expectations due to higher shipments to US clients, which commanded lower average selling prices,” SinoPac analyst Fion Chen (陳奕均) said in a client note.
“However, as we have highlighted previously, we believe that still-strong customer demand and production lines expected to come online in the second half of this year should keep the company’s long-term uptrend intact,” Chen said.
St Shine shares on Friday last week lost 4.79 percent to close at NT$795 in Taipei trading. They have declined 18.97 percent on the over-the-counter market this year.
The company’s sales would fail to return above NT$600 million (US$20.12 million) for another month, due to fewer orders from Japanese clients, who are in a product transition period, and a higher proportion of shipments to US clients, Chen said.
US sales accounted for 8 percent of St Shine’s total sales last year and shipments to the US, driven by a higher number of orders from Hubble Contacts, are expected to make up 15 percent of its overall sales this year, local Chinese-language media reported.
The New Taipei City-based company, which sells contact lenses under the Ticon (帝康) brand, on Thursday reported combined sales of NT$2.75 billion in the first five months of this year, up 11.71 percent from a year earlier.
Sales for this month might reach between NT$590 million and NT$600 million, compared with NT$586 million last month, SinoPac said, while revising sales projections downward for this quarter to NT$1.76 billion from an earlier estimate of NT$1.8 billion.
Sales in the third quarter could increase to NT$2.02 billion, thanks to higher capacity utilization and seasonal demand, but might stay relatively flat at NT$2.06 billion in the fourth quarter, SinoPac added.
For the whole of this year, sales are predicted to grow 15.6 percent annually to NT$7.42 billion, while earnings per share could reach NT$36.18, compared with NT$31.52 last year, after factoring in the effect of gross margin erosion, as products are sold to US clients at a lower price and US shipments generate a lower profit margin than those to other markets, the equity consultant said.
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