 2010-10-11 |
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(Taipei News) The implementation of power rationing measures in mainland China has led to a tight supply of BOPP film. Additionally, a fire at Nanya’s Chiayi Plant is set to convert a production line originally making BOPP film into one for producing pearlescent paper, driving up prices for BOPP film, tape, and soft bags. As a result, profit margins for YC (4306) and Nanya (1303) are looking promising.
Analysts point out that the two damaged pearlescent film production lines at Nanya are similar to YC's film production lines. It is expected that starting in November, YC's film production lines may see price increases of 5% to 8% monthly, with Q4 revenue projected to increase by 6% to 15%.
Manufacturers have noted that the BOPP film market in mainland China has historically been oversupplied. However, recent power rationing measures in response to the country's 11th Five-Year Plan energy-saving goal of 20% have suppressed BOPP production capacity, leading to rising price expectations in the market.
In addition, a fire occurred recently at Nanya’s Chiayi Plant (pearlescent paper factory). Nanya has temporarily relocated production lines to its Nantong factory in mainland China and plans to adjust at least one of the remaining four BOPP film production lines at the Chiayi plant to produce pearlescent paper, resulting in a monthly supply reduction of at least 2,000 tons.
Analysts estimate that YC's Q3 revenue will be between NT$1.05 billion and NT$1.15 billion, with a slight increase in gross margin to 13% to 14%. Including contributions from its investments in Wangzhou Construction and ACHEM, which contributed NT$42 million and NT$69 million respectively, YC's estimated Q3 profit is around NT$142 million, with earnings per share (EPS) of NT$0.61.
In Q4, alongside rising prices in its main business, analysts project that YC’s gross margin will continue to rise to 15% to 16%, with quarterly EPS estimated at NT$0.65. For the entire year, after-tax earnings are expected to reach approximately NT$670 million, an increase of 17.43%, with EPS of NT$2.52.
(Source: Industrial Times - Reporter Peng Hsuan-yi, Taipei) |
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