Apparel maker Makalot Industrial Co (聚陽) on Friday reported consolidated revenue of NT$2.15 billion (US$72.61 million) for last month, a 49.7 percent increase from a month earlier, which continues its rebound from April, thanks to rising orders.
Last month’s revenue was still 6.29 percent lower than a year earlier, as the COVID-19 pandemic has weighed heavily on consumer demand.
“The strong growth momentum for the month implied that the worst has passed in terms of COVID-19’s effects on sales, with April being the low point, and orders previously deferred in the second quarter shipping in June,” Yuanta Securities Investment Consulting Co (元大投顧) said in a note.
“It also reflected strong consumer demand for casual clothes and sportswear with high value for money, with people in the US and EU adjusting to a new lifestyle, including working from home,” it said.
Makalot, a manufacturer of ready-to-wear apparel, counts GAP Inc, Fast Retailing Co’s GU sub-brand, Kohl’s Corp, Target Corp, Walmart Inc and Hanesbrands Inc among its major customers.
Combined revenue in the second quarter reached NT$4.73 billion, down 22.9 percent from the first quarter and a 23.5 percent decrease from a year earlier, the company said.
Accumulated revenue in the first half of the year was NT$10.86 billion, down 15.8 percent year-on-year, the company’s regulatory filings show.
As COVID-19 outbreaks are slowing in many countries and customers have begun to request that previously deferred orders be shipped in sequence, Makalot’s operations are expected to improve monthly and its third-quarter revenue should be better than previously expected, Yuanta said.
“Third-quarter sales should be better than previously expected and grow by a high single-digit percentage to 10 percent on an annual basis in US dollars, with 5 to 10 percent of sales coming from epidemic prevention clothing,” Yuanta said in the note.
Makalot has transferred some of its production to special protective gowns to help meet soaring demand for those that have P3 particulate filters, and shipments of higher-margin protective gowns began at the end of May, the company said earlier.
Shares in Makalot on Friday rose 1.87 percent to close at NT$163.5 in Taipei trading. They have fallen 26.03 percent since the beginning of the year.
With a better order outlook and strong earnings growth expected next year, Yuanta raised its 12-month target price on the stock to NT$201, from NT$162, saying it reflects Makalot’s resilience amid the pandemic and the firm’s advantageous position after gaining market share from smaller competitors who have been eliminated.
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