The outlook this year for shoemaker Fulgent Sun International Holding Co (鈺齊國際) is expected to remain positive, thanks to product mix optimization, bigger economies of scale and effective cost control, Taishin Securities Investment Advisory Co (台新投顧) said.
The company’s strong growth momentum is likely to continue this quarter after it reported record-high revenue and operating profit in the final quarter of last year, Taishin said in a report.
Fulgent Sun supplies sports shoes and functional outdoor shoes to global brands on a contract basis.
The company on Wednesday last week reported revenue of NT$3.46 billion (US$115.5 million) for the fourth quarter of last year, up 28.42 percent from the same period the previous year.
Operating profit surged by 93.82 percent year-on-year to NT$530.97 million, with gross margin and operating margin improving to 23.5 percent and 15.3 percent respectively, the company said in a statement.
While net profit increased 92.3 percent year-on-year to NT$371.42 million, that was a 8.5 percent quarter-on-quarter decline due to foreign-exchange losses.
“Due to rapid depreciation of the US dollar at the end of the fourth quarter, foreign-exchange losses were as high as NT$67.217 million. Although most of the losses were unrealized, it still shaved about NT$0.39 from earnings per share, resulting in earnings per share of NT$2.14 last quarter, down from NT$2.44 the previous quarter,” the statement said.
For the whole of last year, revenue increased 27.5 percent year-on-year to NT$12.84 billion, operating profit grew 74.6 percent to NT$1.46 billion and net profit advanced 72.2 percent to NT$1.28 billion, or earnings per share of NT$7.81.
Gross margin improved by 1.7 percentage points to 19.7 percent and operating margin rose 3 percentage points to 11.3 percent, the company said.
Fulgent Sun operates three plants in China, two in Vietnam and one in Cambodia, accounting for 34 percent, 42 percent and 24 percent of last year’s production capacity respectively.
As the company continues to add capacity to its facilities outside China, it expects its average tax rate to decline due to a zero rate in Cambodia, Taishin said in the report.
With increased shipments to clients and better control of operating expenses, revenue this year is forecast to increase by 15 to 20 percent year-on-year, while earnings per share are expected to rise to NT$9.52, Taishin said.
Meanwhile, fellow contract shoemaker Feng Tay Enterprises Co (豐泰企業) is this year expected to post an 8.1 percent year-on-year increase in revenue, Yuanta Securities Investment Consulting Co (元大投顧) said in a client note.
Yuanta attributed the growth to an increase in average selling prices, a better product mix and a bigger sales contribution from basketball shoes, driven by Nike Inc’s robust sales growth as well as the Air Jordan 1.
Feng Tay on Jan. 10 posted revenue of NT$73.94 for last year, up 14.63 percent year-on-year.
Operating profit was NT$8.37 billion and net profit NT$6.24 billion, or earnings per share of NT$8.49, the company said.
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