Cosmetics chain operator Poya International Co Ltd (寶雅國際) is to see earnings grow 10 to 15 percent year-on-year this year, as store openings would offset lower-than-expected single-store sales during the COVID-19 pandemic, KGI Securities Investment Advisory Co (凱基投顧) said in a note.
With faster store expansion and better operating leverage, Poya’s earnings growth is likely to accelerate next year, KGI said on Tuesday.
As of Sept. 20, the company had 250 outlets in Taiwan selling cosmetics, lingerie and stationery, according to a presentation document on its Web site following an investors’ conference in Taipei on Monday last week.
Photo: Amy Yang, Taipei Times
“Poya is expected to open 5-10 new stores this quarter and increase its number of stores to 255-260 by the end of this year, which would neutralize the negative effects of slower growth in single-store sales due to decreased customer traffic,” analysts Angus Chuang (莊政翰) and Jenny Liu (劉昃恩) said in the note.
The company is also expected to launch more Poya Home (寶家) hardware stores, increasing from the current 15 to 30 by the end of the year, to create a second growth driver, they said.
It is expected to open 25 Poya outlets and 30 Poya Home stores next year, which would lift its earnings by 27 percent from this year, they added.
Poya is seeking faster expansion as storefronts come up for rent during the pandemic, while competitors Watsons Personal Care Stores (Taiwan) Co (台灣屈臣氏) and Tomod’s Inc have been downsizing.
Poya reported net profit grew 72.4 percent quarter-on-quarter and 37.1 percent year-on-year to NT$687.1 million (US$23.75 million) last quarter.
That translated into earnings per share (EPS) of NT$7.03, higher than KGI’s forecast of NT$6.07, as gross margin came in better than expected at 44.8 percent due to economies of scale, while operating margin hit a record high of 18.4 percent thanks to better workforce management.
The government’s Triple Stimulus Vouchers, corporate promotions, as well as new store openings helped revenue jump 20.9 percent from the previous quarter and 14.9 percent from the same period last year to NT$4.76 billion, a record high for a single quarter.
In the first three quarters of the year, net profit totaled NT$1.58 billion, up 14.5 percent from a year earlier, with EPS of NT$16.17.
Cumulative revenue increased 10.2 percent to NT$12.97 billion, with gross margin improving 0.52 percentage points to 43.23 percent and operating margin rising 0.02 percentage points to 15.16 percent, company data showed.
In light of the strong third-quarter results and Poya’s expansion strategy, KGI has adjusted its EPS forecast for this year from NT$21.15 to NT$21.96, and predicted that next year’s would reach NT$27.79.
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