SCI outsourcing expected to aid sales after factory fire - Taipei Times

2022-05-20 21:48:46 By : Ms. Winnie SunsGoods

SCI Pharmtech Inc’s (SCI, 旭富製藥) plans to outsource production of intermediates to other Taiwanese firms are expected to help recover some of its lost sales, after its plant in Taoyuan’s Lujhu District (蘆竹) was severely damaged by a fire on Sunday last week, analysts said this week.

In the wake of the biggest crisis since its establishment in 1987, the company said that it is facing losses of NT$800 million (US$28.06 million) due to fire damage and NT$600 million losses due to the cancelation of first-quarter orders.

“If the company could successfully transfer all orders of intermediates, it would likely recover 20 percent of sales of its products, including polyglutamic acid and valproic acid,” Yuanta Securities Investment Consulting Co (元大投顧) analysts Jane Jiang (蔣欣穎) and Raymond Lee (李冠賢) said in a research note on Tuesday.

Photo: Wei Chin-yun, Taipei Times

SCI produces active pharmaceutical ingredients (API), intermediates and specialty chemicals, with intermediates contributing 26.66 percent to its total sales in 2019.

Local media reported that SCI had been in talks with other Taiwanese API makers — including Chunghwa Chemical Synthesis & Biotech Co (中化合成生技), Syn-Tech Chemical & Pharmaceutical Co (生泰合成), Formosa Laboratories Inc (台耀化學), Cheng Fong Chemical Co (正峰化學) and Seven Star Pharmaceutical Co (七星化學製藥) — about outsourcing its intermediates production.

In a regulatory filing on Friday last week, SCI said it was discussing with local manufacturers about outsourcing some production during the rebuild of its lines.

The company said it would take at least six months to rebuild the plant.

“It will take another two to three years to resume shipments, as the new production lines will still need to pass review by authorities from various countries,” the Yuanta analysts said.

SCI reported earnings per share of NT$8.04 in the first three quarters of last year, but given production suspension, asset and inventory impairment losses, and potential compensation to nearby factories owned by other firms, it is forecast to report losses per share of NT$9.19 in the October-to-December quarter, Yuanta said.

The company would likely post losses for last year, with estimated losses per share of NT$1.15, compared with earnings per share of NT$7.19 in 2019.

SCI shares have dropped 32.26 percent since the fire. For the whole of last year, shares fell 22.94 percent.

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