 2012-06-11 |
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Economic Daily News / Reporter Yih-Lang Chou / Taipei Report
YC and ACHEM are vertically integrated with YC producing biaxially oriented polypropylene (BOPP) films, which serve as raw materials for adhesive tapes, while also manufacturing tapes and packaging materials. ACHEM focuses on adhesive tapes, with its OPP (oriented polypropylene) tape production being the largest globally, and PVC tape production ranking second worldwide. On Friday, YC closed at NT$26.65, down NT$0.25, while ACHEM closed at NT$14.35, down NT$0.05.
YC noted that in April, the decline in petrochemical raw material prices led customers to delay orders due to expectations of further price drops. Additionally, the May Day holiday in China affected customs operations in late April, resulting in decreased film and tape sales for both YC and ACHEM compared to March. However, customer inventory levels are expected to bottom out in May, and the effects of deferred shipments are anticipated to become evident in May and June.
Moreover, the group is investing in adhesive tape production in Ho Chi Minh City, Dongguan, and Shanghai, with various capacities expected to come online from the end of this year through mid-next year, which will inject new growth momentum into the group's revenue. Analysts indicate that YC's sixth BOPP film production line at the Zhangbin plant, which began operations at the end of last year, has achieved full production capability this year. The new line, with a monthly capacity of 2,500 tons, will increase total monthly film capacity to 9,500 tons when combined with the existing five lines, marking a 35% increase in annual capacity. Consequently, the company’s performance this quarter is expected to significantly surpass that of the same period last year.
Additionally, the price of PP has recently dropped from USD 1,434 per ton to USD 1,323 per ton, a nearly 10% decrease. It is estimated that YC's revenue this quarter will increase by nearly 10% compared to the previous quarter, with profits expected to rise due to reduced cost pressures.
For ACHEM, although there is no new capacity addition in the first half of the year, revenue for this quarter is expected to outperform the previous quarter due to falling raw material prices and the end of the off-season, with a projected quarter-over-quarter increase of about 10%. In the second half of the year, the company plans to produce niche adhesive tapes at its Yangmei plant in Taiwan, with production scheduled to start in Q4. Additionally, the Shanghai plant will add two new PVC tape production lines, and the Vietnam plant will begin producing PVC and OPP tapes in its first phase, also slated for Q4. Thus, the second half of this year and next year are expected to be periods of significant revenue growth for the company. |
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