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Q3 Revenue of SAN SHING FASTECH will Increase with Profit Margin Stable at 20%
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2013-07-19
Benefited from the comeback of market demand, the company's Q3 revenue is expected to surpass Q2. Artificial person states that the company will see consecutive revenue rises in the first 3 quarters with the full year margin profit above 20% (compared with the previous 17%), after the drop in Q4 last year. Soon after the stock market opened, the stock price of SAN SHING FASTECH rose to NTD 75, and then turned flat, but was back at above NTD 73 in intraday price.
SAN SHING FASTECH mainly produces auto screws and has been through years of cultivation. Currently, its clients are mainly suppliers of global major car plants; thus, its profit margin and POs are more stable than its peers. Its nut sales take above 60% of total revenue, while screw sales are below 20%. Other products are more complicated. The company sees huge opportunity in the screw market, and it has been expanding business scale in the screw territory. However, its screw capacity remains smaller, so it still has a lot to work on the screw business.
Stricken by the continuous drop of wire rod price and the weak European and American market, SAN SHING FASTECH's PO decreased in the second half of 2012, and even bottomed in Q4. Fortunately, the company bottomed out with the recovery of US car market. Its Q1 revenue rose 28% from that of Q4 2012, and its revenue in Q3 further increased 15%. Artificial person expects the Q3 revenue will continue to rise.
As to profit performance, artificial person states that its profit margin dropped to 4% in Q4 2012 due to lower utilization rate and appreciating NTD. However, its Q1 profit margin in 2013 came back to the normal level of 20.39% because of rising utilization rate and more competitive NTD exchange rates, which according to artificial person will help maintain the company's Q2 margin profit at above 20%. In addition, in order to expand business in the screw market, the company has bought a 39 thousand square meter area adjacent to its plant area in Tainan. It plans to increase screw capacity in the future. The company will initiate plant establishement in 2014 at the fastest, and capacity arrangement is under evaluation.
