 2015-11-04 |
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The world's largest PVC tape manufacturer, YC Group, has faced profitability challenges due to low oil prices. However, with its subsidiary Shin Kong Global set to secure major clients in mainland China next year, and Achem benefiting from a favorable U.S. market, along with the group’s investment in local commercial properties, including a trial operation of a backpacker hotel on Chongqing South Road in Taipei and new projects in Shilin and Xinzhuang, the company anticipates a modest revenue increase of 3% to 5% for the coming year.
Shin Kong Global’s Chairman, Jiang Wenrong, described the company's performance as "stabilizing." Currently, the company’s two main business sectors—packaging materials (Bao Dashi) and cloud applications—are divided with a ratio of 9:1. The revenue split between mainland China and Taiwan is 3:7, with an expected adjustment to 5:5 soon.
Jiang emphasized that the previous approach of setting up service points directly would no longer be pursued. The focus is now on large clients with high technical thresholds, reducing risks. The company currently has 75 distribution points in Taiwan and 4 in mainland China, with plans to establish 1 to 2 new points in South China next year.
In the cloud information sector, Shin Kong Global will leverage its internal expertise in project construction and maintenance, focusing on virtual channels and e-commerce platforms. Jiang mentioned that this year, adding products and services to the PCHOME e-commerce platform generated an additional NT$1 million in revenue. While this amount may seem small, it represents extra income. However, the variability in this sector makes future outcomes uncertain.
Another YC subsidiary, Achem, which specializes in OPP and PVC tapes, currently operates at 70-80% capacity. Chairman Lin Yousheng noted that due to low oil prices, demand in the fourth quarter is weaker than in the third quarter, impacting revenue, as clients had already prepared funds for Halloween. Nevertheless, the company has set a 15% growth target for next year, driven by a favorable U.S. market and anticipated benefits from vertical integration in Q1. Achem also plans to add a new production line for hot melt adhesives between 2016 and 2017.
Looking ahead to next year, Jiang Wenrong pointed out that growth momentum will primarily come from mainland China, with 2 to 3 major clients in the panel and mobile phone industries expected to join.
Analysts estimate that Shin Kong Global’s revenue this year will reach NT$1.8 billion, with a 20-30% increase and an EPS (earnings per share) of about NT$1.8. Next year, revenue could grow to NT$2 billion with an EPS of NT$2. However, due to waning momentum in YC’s film sector, the overall performance of the group’s core business is expected to be flat, with a slight annual growth of 3% to 5% driven by non-operational profits, potentially bringing EPS back to NT$1. (China Times) |
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