Pou Chen Corp (寶成工業) yesterday saw its shares surge more than 5 percent to hit their highest level in nearly five years, after the shoemaker’s third-quarter results beat market expectations on improving production efficiency and footwear order recovery.
Net profit was NT$5.73 billion (US$176.6 million) during the July-to-September period, down 5.9 percent from NT$6.08 billion a year earlier but up 67.86 percent from NT$3.41 billion the previous quarter, the company reported on Tuesday.
Earnings per share (EPS) were NT$1.94 last quarter, compared with NT$2.06 a year ago and NT$1.16 three months earlier, it said.
Photo: Bloomberg
That topped the consensus estimates of NT$3.62 billion in net profit and NT$1.23 for EPS by analysts, according to data compiled by Bloomberg.
The better-than-expected results came as the company’s third-quarter revenue grew 14.6 percent year-on-year and increased 2.3 percent quarter-on-quarter to NT$66.8 billion. Gross margin and operating margin also beat analysts’ estimates to climb to 24.48 percent and 6.2 percent respectively, company data showed.
“The firm’s operating margin expansion was driven by a footwear order recovery and capacity utilization rate growth to 95 percent amid optimized capacity allocation and production efficiency,” Yuanta Securities Investment Consulting Co (元大投顧) said in a note yesterday.
Pou Chen shares jumped 5.75 percent in early trading before closing up 5.11 percent at NT$41.15 in Taipei trading, the highest closing price since December 2019. They have risen 26.7 percent so far this year, Taiwan Stock Exchange data showed.
The company is the world’s largest contract manufacturer of branded athletic and casual footwear, with clients such as Nike Inc, Adidas AG, Asics Corp, New Balance Athletics Inc, Salomon SAS and Timberland Co. It also has investments in retailing and land development, as well as in financial services providers such as Nan Shan Life Insurance Co (南山人壽).
In the first three quarters of this year, Pou Chen reported a net profit of NT$13.79 billion, up 30.4 percent from NT$10.58 billion in the same period last year.
The company’s EPS also rose from NT$3.59 to NT$4.68 over the period, surpassing the NT$3.61 per share it earned for the whole of last year and marking the second-highest level for the period in the company’s history.
Cumulative revenue in the first three quarters totaled NT$195.42 billion, an annual increase of 5.2 percent from NT$185.76 billion, which the company attributed mainly to the steady recovery of its original equipment manufacturing (OEM) shoe business, as it effectively offset the negative impact of weak sales in its sporting goods retail business.
The OEM shoe business reported that sales grew 13 percent year-on-year last quarter and made up 67.9 percent of the firm’s total revenue in the quarter, while the retail business — operated by Hong Kong-listed subsidiary Pou Sheng International Ltd (寶勝國際) — saw sales decrease by 8.3 percent from the previous year and comprised 31.7 percent of the overall revenue, Pou Chen said.
“The global economy has continued to expand since the beginning of the year and industrial inventories have returned to healthy levels, despite uncertainties in the international political situation,” Pou Chen said in a statement on Tuesday.
Gross margin was 24.58 percent in the first three quarters, up from 23.9 percent a year ago, while operating margin rose to 5.75 percent, from 2.88 percent, the company said.
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