 2011-08-03 |
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YC (4306), the largest tape group in Taiwan, announced that the company has sold land in Neihu, generating a profit of approximately NT$700 million, which will be recognized in the fourth quarter of this year. In addition, with product prices on the rise, the company has raised its financial forecast for this year, projecting operating profit of NT$1.717 billion, an increase of 99.29%. Pre-tax earnings per share are expected to reach NT$5.7 this year.
YC recently announced that its subsidiary, Wangzhou Construction, has sold 738 ping (2,439 square meters) of land in the Tanmei section of Neihu District, Taipei, at NT$1.65 million per ping. After deducting costs, the profit is approximately NT$700 million. YC stated that the transaction is expected to be recorded in the fourth quarter of this year.
With the profit contribution from the land sale, YC has raised its financial forecast for this year. The company expects full-year consolidated revenue of NT$20.304 billion, an increase of 6.86%. The gross profit margin is projected to increase from 13.74% to 16.7%, and operating profit to reach NT$1.717 billion, an increase of 99.29%. Pre-tax earnings are expected to reach NT$1.791 billion, an increase of 88%. After deducting minority interests, consolidated pre-tax earnings are estimated at approximately NT$1.6 billion, with pre-tax earnings per share at NT$5.7.
YC stated that the company currently has five Biaxially Oriented Polypropylene (BOPP) film production lines, with a monthly output of about 2,500 to 3,000 metric tons. In January of this year, the Ningbo Yachao facility successfully achieved full production, and the new film plant in Changbin Industrial Park is expected to produce 3,000 metric tons per month. The company is working intensively on this facility, which is expected to begin production in October, positioning YC to seize growth opportunities. The group’s annual production is estimated to reach 160,000 metric tons. With the launch of the new production line and rising product prices, revenue is expected to continue growing.
Additionally, to meet the demand for film from Li Peng, a subsidiary of the 3M Group, YC is planning to invest in a seventh production line, which is expected to begin production by the end of 2012. As for tape production, the group’s subsidiary ACHEM plans to expand product lines in Yangmei, Taiwan, and Shanghai, China, and build new factories in Dongguan, China, and Vietnam.
Regarding concerns over the potential shortage of raw materials due to the fire at Formosa Plastics Group's Sixth Naphtha Cracking Plant, YC stated that 70% of its raw materials come from suppliers in Singapore, with only 30% from Formosa Plastics Group. Currently, YC has about one month's worth of safety stock, and the company can increase sourcing from abroad, so the impact of a raw material shortage is expected to be minimal.
Furthermore, if a large-scale shutdown occurs at Formosa Plastics Group, prices of petrochemical products will likely rise, which will also positively impact the prices of film and tape products, benefiting YC’s performance in the second half of the year.
Regarding the second-half performance of its subsidiary ACHEM, YC mentioned that it signed a price contract with a major international company in July, so the previous issue of profit compression is expected to be resolved. |
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