 2012-07-13 |
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Thanks to contributions from new production capacity and the benefits from invested packaging materials, YC (4306) achieved a 4.43% quarter-over-quarter increase in consolidated revenue for the second quarter. This year, YC’s new capacity is expected to contribute to a 20-30% year-over-year increase. With oil prices stabilizing and rebounding in the second half of the year, downstream stock replenishment demand is expected to emerge, supporting a rebound in the plastics industry and stable growth in operations.
YC acknowledges that the global economic outlook remains uncertain, and demand is expected to remain weak in the second half of the year. It is estimated that YC and its affiliate ACHEM (1715) will see flat revenue for the third quarter. However, as oil prices stabilize and rebounding, downstream stock replenishment demand is expected to drive a rebound in the plastics industry.
ACHEM’s Dongguan plant currently has a PVC tape production line with an annual capacity of 7 million square meters. The plant has acquired approximately 100 acres of new land for expansion, which is expected to increase PVC tape production capacity by 50%, or an additional 3.5 million square meters annually.
In terms of upstream integration and upgrades, YC and ACHEM are planning to invest over NT$2 billion in a new petrochemical plant in Jiangsu, China. The new plant will cover 200 acres, with YC and ACHEM planning to invest $49 million and $20 million, respectively, in a phased investment approach in WANZhou Petrochemical (Jiangsu) to advance the first phase of construction.
YC noted that in Q2, international oil prices significantly declined, leading customers to adopt more conservative ordering practices to reduce inventory devaluation risks. Nevertheless, ACHEM’s products maintained stable prices and volumes, with Q2 revenue reaching NT$1.379 billion, an 8.83% quarter-over-quarter increase and a 21.52% year-over-year increase. Additionally, the benefits from Xinzhou Global’s packaging materials network have supported a 3.17% year-over-year growth in consolidated revenue, totaling NT$9.412 billion for the first half of the year.
YC believes that while global economic uncertainty persists and demand may remain weak in the second half of the year, the stabilization and rebound of oil prices, along with downstream stock replenishment demand, are expected to drive a recovery in the plastics industry. |
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