 2015-04-22 |
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China's Interest Rate Cuts Benefit ACHEM and Xinzhou Global Operations
Commercial Times
Reporter: Peng Xuan-yi, Taipei
China's interest rate cuts are boosting the economy, benefiting ACHEM (1715) and Xinzhou Global (3171), thanks to their new domestic demand and specialty products in China. Among them, Xinzhou Global, after integrating with YC's packaging division, turned a profit last year with an EPS of NT$1.15. This year, with stable revenue from Taiwanese distribution channels and expectations of turning a profit in the Chinese market, analysts estimate a 20-30% increase in operations.
Moreover, ACHEM is seeing stable increases in orders from the Americas and the Middle East, along with stability in the Chinese market. The company's performance is accelerating in Q2, with the addition of the Haian plant in China expected to boost operations in the second half of the year. Analysts forecast a 10-15% growth in operations for the year.
Last year, Xinzhou Global improved its cost and expenses, enhancing its competitiveness in both Taiwan and China. The gross profit margin increased from 17.53% to 21.76% quarter by quarter. Analysts estimate that the Taiwanese distribution channels alone could contribute at least NT$1 per share in EPS for Xinzhou Global annually.
Xinzhou's operations in China include Shanghai, Tianjin, Wuhan, and Dongguan, with plans to expand into the Central and Northern China markets. Expected benefits from these expansions are anticipated to start materializing in Q2, adding long-term revenue growth potential.
Additionally, ACHEM's new PVC tape plant under the "Haian Project" in China is expected to commence production in Q3, increasing capacity by 26%. The new petrochemical plant for acrylic acid and butyl acrylate (with an annual capacity of 80,000 tons) will operate at full capacity to reduce costs and enhance operational performance. |
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