 2015-03-31 |
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Xinzhou President: Cautiously Optimistic for This Year
[Reporter: Peng Xuan-Yi / Taipei]
Li Zhi-Xian, President of Xinzhou Group (4306), has stated that with oil prices stabilizing and improvements in film operations, there is an increase in profit potential. Coupled with contributions from new products in the tape and specialty chemicals sectors, and the turnaround of the downstream packaging business, as well as accelerated progress in petrochemical and asset development, the company maintains a cautiously optimistic outlook.
Additionally, given the stable operations of its listed companies ACHEM (1715) and Xinzhou Global (3171), Xinzhou Group will transfer management to professional managers at this year’s shareholders’ meeting. Li will step down from his roles as chairman and director but will retain his position as chairman of Xinzhou, focusing on global expansion, corporate governance, and high-level talent acquisition.
It is reported that Xinzhou Group’s tape production capacity in China and Taiwan is expected to increase by 10-13% this year. The new niche business in specialty chemicals has a gross margin of about 20-25%, and with the upgrade of new equipment, output contribution is expected to double. Estimates suggest that ACHEM’s operations will grow by 10-15% this year, while Xinzhou Global could see a growth of about 30%. Below are highlights from the interview:
Q: What are the operational strategies for this year?
A: Last year, the sharp drop in oil prices led to losses exceeding NT$100 million from BOPP and acrylic acid price declines, and with no new projects from Wangzhou Construction, Xinzhou’s EPS was only NT$0.28. Fortunately, EPS for ACHEM and Xinzhou Global were NT$1.77 and NT$1.15, respectively, showing growth potential.
This year, we will focus on advancing our tape, specialty chemicals, and packaging material businesses. The petrochemical and film sectors are expected to stabilize with oil price trends, and we estimate that they will turn profitable in Q2. Especially with the benefits of new products from ACHEM and the contributions from the Nantong "Wan’an Plan" new factory, growth momentum is expected to strengthen.
Q: What is the progress on investments in China?
A: We are strengthening our integrated layout, with BOPP and tape production relocating to Ningbo. ACHEM’s "Hai’an Plan" for a new PVC tape factory is expected to start production in Q3, increasing capacity by 26%. Additionally, the new petrochemical plants for acrylic acid and butyl acrylate (with an annual production of 80,000 tons) will utilize versatile operations to lower costs and enhance performance.
Q: What are the capital expenditure plans?
A: Investment for the new specialty chemicals plant in China is estimated at RMB 100 million, with the Hai’an Plan requiring about USD 60 million in capital expenditure, and Ningbo also having an expenditure of NT$100 million. Total funding needs are about NT$2.4 billion.
To address this, ACHEM plans to raise NT$190 million through a cash capital increase, as well as issue NT$200 million in secured exchangeable bonds and NT$700 million in unsecured convertible bonds. At current stock prices, this could raise over NT$1.2 billion.
Q: What are the recruitment plans for this year?
A: Taiwan plans to recruit about 100 people, and with the new factory in China starting production, the total recruitment target is about 300 people. The group aims to increase the proportion of payroll to revenue from 2-3% to 5% over time. With the expansion of revenue scale, there will be greater opportunities to reward employees and attract talent. |
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