 2015-09-28 |
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Due to the economic slowdown in China, Achem (1715), a subsidiary of YC Group, is shifting its focus to the Americas, the Middle East, and Japan. Achem reports that in the second half of the year, American customers are somewhat offsetting the shortfall in Chinese orders. It is estimated that this year, the American market will account for more than 55% of the company’s total revenue.
Last year, the American market accounted for approximately 50% to 55% of Achem's revenue. The company notes that economic momentum in North and Latin America is stable, with strong signs of recovery driving growth in orders.
In contrast, the Chinese market is experiencing a rapid economic slowdown, with sales in China not performing as well as before. Last year, China accounted for over 30% of revenue, but this year it is expected to fall below 30%, highlighting a significant reduction in Chinese orders.
Additionally, the Middle Eastern and Japanese markets are helping to fill the gap left by China, pushing Achem’s revenue for July and August to exceed NT$1 billion. Although revenue for these months declined compared to the same period last year, this is mainly due to high product prices last year when international oil prices were elevated.
However, in the third quarter of this year, Achem benefits from the depreciation of the New Taiwan Dollar, which supports export activities from its Taiwanese plant. On September 25th, Achem's stock price remained flat at NT$12.75.
Analysts estimate that the third quarter will be relatively optimistic, with quarterly revenue expected to surpass NT$3 billion and after-tax earnings per share (EPS) of NT$0.35, representing growth from the second quarter.
Looking ahead to the fourth quarter, Achem expects stable order volumes from American clients and anticipates that revenue from its Chinese operations, which stopped declining in August, will stabilize. Therefore, the company expects the fourth-quarter performance to be on par with the third quarter, with the overall low point of operations occurring in the second quarter of this year.
Achem’s stable tape manufacturing capabilities are also reflected in its subsidiary, Xinzhu Global. In July and August, Xinzhu Global’s combined revenue was NT$297 million. Analysts estimate that the third-quarter revenue will be around NT$447 million, marking a 1.1% increase both quarter-over-quarter and year-over-year.
This year, Xinzhu has adjusted its customer strategy to target specific large manufacturing users as potential clients. In the second half of the year, the company successfully entered the supply chain, adding about 2 to 3 new clients, who are currently in the sample-testing phase. It is anticipated that these clients will place formal orders in the fourth quarter, boosting revenue for that period.
Looking ahead to next year, the contribution from new customers is expected to significantly increase, with revenue projected to grow by over 30%. |
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