 2015-04-17 |
|
|
Xinzhou's Profit Outlook Remains Bright This Year, with EPS Expected to Rebound to NT$10
MoneyDJ News, April 16, 2015, 10:45 AM
Reporter: Cheng Ying-zhi
After integrating YC's (4306) packaging materials division last year, Xinzhou (3171) has seen the benefits of the group's synergy, with its gross margin improving each quarter. Looking ahead, analysts expect Xinzhou to continue performing well in its Taiwanese market, while the Chinese market is expected to turn profitable this year, driving further growth in Xinzhou's profits. Analysts are optimistic that Xinzhou's book value per share could rebound to above NT$10 this year, with a potential return to dividend payments as early as next year.
Xinzhou's primary business is its "Packmaster" distribution network. Operating on a B2B model, Xinzhou provides comprehensive purchasing services to various clients. In addition to selling some products from ACHEM (1715), Xinzhou predominantly represents well-known international brands. By continually expanding its product offerings, Xinzhou has increased customer loyalty, with about 80% of its revenue coming from the Taiwanese market and the remaining 20% from China.
Following the integration of YC's packaging materials division, Xinzhou has seen improvements in costs and expenses, enhancing its competitiveness in both markets. Although Xinzhou's revenue did not see significant changes last year, its gross margin improved from 17.53% in Q1 to 21.76% in Q4.
In Q1 of this year, Xinzhou continued to see increased shipments, but a decline in plasticizer prices affected its average selling price (ASP), resulting in a slight year-over-year decrease in consolidated revenue. Nevertheless, analysts remain confident in the stability of Xinzhou's overall profit performance.
Looking ahead, Xinzhou's established presence in the Taiwanese market, along with reduced unnecessary costs and expenses, is expected to further enhance profitability. Analysts estimate that Taiwan's market could contribute at least NT$1 per share to Xinzhou's EPS, forming a solid base for the company's profitability.
In China, Xinzhou has established a robust presence in cities such as Shanghai, Tianjin, Wuhan, and Dongguan. Given the different payment models in China compared to Taiwan, Xinzhou has actively adjusted its Chinese market transactions. The significant reduction in losses from last year is expected to turn into profits this year. Xinzhou plans to expand its business in Central and Northern China, with results anticipated to begin showing in Q2. The Chinese market is expected to be a major driver of Xinzhou's future growth.
Xinzhou's consolidated revenue for 2014 was NT$1.772 billion, down 4% year-over-year. However, with continuing improvements in gross margin and cost management, EPS reached NT$1.15, a significant increase from NT$0.61 in 2013. Analysts note that while Xinzhou's capital has expanded to NT$592 million this year, EPS still has room to grow. Xinzhou's book value per share was NT$8.98 at the end of last year, with a remaining deficit of approximately NT$175 million. It is anticipated that Xinzhou will fully offset this deficit this year, with the book value per share expected to exceed NT$10, and the company may resume dividend payments as early as next year. |
|
