SinoPac Securities Investment Service Corp (永豐投顧) has cut its target price on shares of apparel maker Makalot Industrial Co (聚陽) on expectations that the company will report slightly weaker sales momentum next year than this year.
In a research note released on Thursday last week, SinoPac said it has lowered its target price for Makalot shares to NT$192 from NT$216, given the garment maker for global clothing brands is to see revenue for next year grow by between 5 and 10 percent annually, compared with a double-digit percentage growth this year.
Despite the cut in target price, SinoPac maintained its recommendation on the stock at “buy.”
Jih Sun Securities Investment Consulting Co (日盛投顧) also retained its “buy” rating on Makalot’s shares with a target price of NT$175, citing the company’s growth momentum in the low season this quarter and the arrival of the traditional peak season next quarter.
Shares of Makalot rose 0.33 percent to close at NT$153.5 on Friday. They have dropped 9.71 percent this year, compared with the broader market’s 19.35 percent rise over the period.
Makalot reported a 28.64 percent year-on-year increase in revenue for last month to NT$2.08 billion (US$91.8 million), which the company attributed to rising orders for sports apparel from its customers. On a monthly basis, revenue fell 7.1 percent.
From January through last month, aggregate revenue rose 14.88 percent year-on-year to NT$24.91 billion.
Makalot said it maintains a positive outlook for next year on the back of the increase of new and old customers, the larger proportion of high-priced sports apparel shipments and the ramp-up production of a new plant in Indonesia, while the fire-damaged plants in northern Vietnam are expected to be renovated and resume mass production next quarter.
SinoPac said the company would also benefit from major brand clients’ supply chain consolidation in the long term.
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