The order visibility for St Shine Optical Co Ltd (精華光學) remains low in the near term because of intense competition in the contact lens industry and soft pull-in from key Japanese clients, analysts said after the firm’s third-quarter meeting on Nov. 21.
Although the company is placing its hopes on its highly anticipated nearsightedness control contact lens for children, the product remains under review by the Food and Drug Administration (FDA) and it would take time before it contributes to the company’s bottom line, analysts said.
At the third-quarter results presentation, St Shine said that the control lenses had passed a “double-blind” clinical trial in October, after more than five years of hard work, and the company would next apply for certificates and patents in Taiwan and other countries.
“The company expects to apply for relevant drug permits in about 4 to 6 months, indicating the contribution of its myopia control lens product will be limited before the second half of 2020,” Yuanta Securities Investment Consulting Co (元大投顧) analyst Juliette Liu (劉珮昀) said in a note last week.
In Taiwan, 2.27 million people aged 4 to 14 have nearsightedness and the control lenses aim to slow its progression, Liu said.
However, compared with traditional treatments, such as wearing ortho-k lenses, or using atropine eye drops or soft multifocal lenses, it would take time before soft contact lenses such as St Shine’s control lenses are adopted widely, as distribution channels would need to be established, physicians would have to be trained and parents would need to be educated, she said.
Apart from the uncertainty surrounding the time line of the drug permit, the company would not be able to finalize its distribution method until the FDA determines the classification of its control lens product, SinoPac Securities Investment Service Corp (永豐投顧) said in a separate note.
In the first three quarters of this year, St Shine’s net profit decreased 21.73 percent to NT$976.56 million (US$32 million) from a year earlier, with earnings per share (EPS) of NT$19.37, while revenue fell 4.02 percent annually to NT$4.77 billion, the company’s financial statement showed.
In comparison, local competitor Ginko International Co (金可國際) reported that its net profit increased 34.98 percent year-on-year to NT$787.99 million in the first three quarters, with EPS of NT$8.52, while revenue rose 7.4 percent to NT$5.83 billion over the period on the back of steady sales in Taiwan and robust growth in Japan.
Smaller peer Pegavision Corp (晶碩光學), a contact lens subsidiary of Pegatron Corp (和碩), saw its net profit fall 23.6 percent to NT$298.02 million in the first three quarters, with EPS of NT$4.97, but revenue increased 3.5 percent to NT$2.36 billion due to its rising market share in the contract design business.
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