Taroko Textile Corp (大魯閣纖維), a textile company aiming to transform itself into an operator of small-sized sports and recreation centers, said yesterday that it aims to set up 20 centers in China in the next three years after the first center it built in China’s Jiangsu province became profitable in the second month of operation.
The company launched the first center in April in a mall built by Japan-based retail and financial service provider Aeon Group in a suburban area of Jiangsu, and the center generated revenue of a 650,000 yuan (US$96,700) in May, exceeding its break-even point of 400,000 yuan a month, Rex Lin (林志松), CEO of the company’s overseas operations, said yesterday.
Jerry Hsu (許俊麒), vice president of Taroko, said that sales were higher than the company had forecast, as the suburban mall attracted more customers than they expected.
Taroko is expected to launch a center in Chengdu, China in October and another in Jinan, Shandong, China by the end of this year, Hsu said, adding that the company has high hopes for its Chengdu center.
Taroko’s sports and recreation center in Chengdu is located in a complex of department stores and office buildings built by Hong Kong-based real estate developer Wharf (Holdings) Ltd (九龍倉), and Taroko expects sales at the center to be higher than the one in Jiangsu, Hsu said.
By the end of next year, Taroko aims to increase the number of its centers in China to 10, Hsu said.
The 30 centers in Taiwan generated revenue of NT$66.7 million (US$2.22 million) last year, accounting for 7.43 percent of Taroko’s revenue of NT$897.94 million last year, according to the company.
With 92.57 percent of its revenue from the textile division, sales from its real-estate development and sports and recreation divisions will rise to above 50 percent from 2016, after its new mall in Greater Kaohsiung becomes operational at the end of next year, Hsu said.
The company plans to spend NT$4 billion to build the mall, which is the first project of the company’s real estate development division, and the mall is expected to generate NT$5 billion a year starting 2016, according to Taroko.
From January through last month, Taroko reported revenue of NT$429.32 million, down 12.13 percent from NT$488.59 million a year ago, according to the company’s filing to the Taiwan Stock Exchange.
Hsu said the decline was because the company closed its weaving division in China last year due to low profit margins.
Last quarter, the company registered losses of NT$60.76 million, up 4.67 percent from losses of NT$58.03 million the previous year, according to the filing.
Hsu said it would be difficult for the company to get back into the black this year because its real-estate development division would incur losses of NT$100 million in both this year and next year by building the mall in Kaohsiung.
However, Taroko has land properties with a market value of NT$1 billion, which could boost its profit if it can sell them, Hsu said.
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