Yeong Guan Energy Technology Group Co (YGG, 永冠能源), which produces advanced casting components for specialized applications, is expected to report a 10 percent annual increase in net income for last quarter due to growing contributions in the wind turbine business, HSBC Securities Taiwan Corp said.
YGG’s consolidated revenue in the January-to-March quarter increased 2.68 percent annually to NT$1.91 billion (US$59.17 million), as castings shipments grew in line with the company’s expectations, gaining 9.8 percent year-on-year to 36,599 tonnes last quarter.
HSBC attributed the high shipments in the last quarter to high utilization rates of its plants, with 108 percent usage in January, 54 percent in February — due to the Lunar New Year holiday — and 115 percent in March, saying that shipments performance resulted in a positive outlook for the company’s margin performances.
“We expect gross margin expansion in the second quarter this year driven by continued product mix improvement,” HSBC analysts Chloe Wu (吳家瑋) and John Chung said in a report on Thursday last week.
HSBC forecast the company’s net profit last quarter would grow 10.3 percent annually to NT$257 million, or earnings per share of NT$1.96.
YGG is expected to announce its first-quarter earnings result on Friday.
The company, whose products are used in the fields of energy, industrial machinery, injection molding and medical equipment, said its wind business sales contributions increased to 63 percent in the last quarter, as global demand led by larger wind turbine components continues to grow.
YGG’s aim is to increase the revenue contribution from its wind business from last year’s 59 percent to between 70 percent and 85 percent this year, the firm told investors last month.
The company also plans to lower the sales contribution from its non-energy segment to between 15 percent and 30 percent this year from last year’s 41 percent, it said.
After completion of a new plant in Jiangsu, China, at the beginning of the year, the company raised its shipment target from 165,000 tonnes to between 175,000 and 180,000 tonnes of castings per year, increasing by 15 percent annually.
YGG said it expects its castings shipments for offshore wind turbines with a capacity of more than 3 megawatts to make up 40 percent of its total shipments for the first time this year, the company said.
The company approved plans to distribute a cash dividend of NT$8.5 per share based on its earnings per share of NT$12.24 last year. That translates into a payout ratio of 69.44 percent, higher than last year’s 61.3 percent.
YGG’s planned dividend distribution suggests a yield of 4.06 percent, based on the company’s closing price of NT$209.5 in Taipei trading on Friday.
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