Letter to Shareholders
The Company's consolidated net operating income in 2022 was NT$1,701,587 thousand, which showed a year-on-year decrease of NT$757,843 thousand (30.8%) compared with the consolidated net operating income of NT$2,459,430 thousand in 2021. In 2022, the revenue and the relative profit declined significantly compared with the same period in 2021, and the after-tax profit per share was NT$1.87. Most clients adopted low inventory policies in 2022 because inventory digestion and destocking rate were slower than expected, and the price of raw materials has fallen, resulting in a significant decline in revenue and profit.
The continued revenue growth will be a major challenge in 2023 due to high uncertainty in the overall and external environment. However, orders reduced by clients due to inventory digestion in 2022 are expected to gradually return to normal. The Company will continue to develop new products and closely observes the client and terminal demand status to achieve better revenue performance than the previous year.
The Company's management team will respond rigorously in the coming year by paying close attention to the overall economic environment and market developments, strengthening core technologies, and providing existing clients with more complete solutions. We are committed to the R&D of high-value-added products such as high-temperature resistance, high-strength, and conductive engineering plastics to improve the Company's overall profitability.
We will explore new business sectors, improve the sales structure and continue to extend our business in the new material category while encouraging our staff to reduce costs. We will continue to develop new technologies and materials, lead the industry, and expand our products into new energy, low-voltage electrical appliances, 5G communications, home and bath, semiconductors, and other industries. We aim to improve the regional dealer marketing model, increase the global industry market share, and continue to innovate the Company's operating performance.
The following is the Company's business overview for 2022 and its business plan for 2023:
I. 2022 Business Report:
(I) Implementation result of the business plan:
The Company's 2022 consolidated net operating income was NT$1,701,587 thousand, which showed the decrease of NT$757,843 thousand (30.8%) compared with the consolidated net operating income of NT$2,459,430 thousand in 2021. In terms of profit, the after-tax net profit in 2022 was NT$103,333 thousand, which decreased by NT$119,911 thousand from 2021's after-tax net profit of NT$223,244 thousand, and the after-tax profit per share was NT$1.87.
(II) 2021 consolidated financial income, expenditure, and profitability:
1. Financial structure
Analysis items | 2021 | 2022 |
---|---|---|
Equity to assets ratio (%) | 58.17 | 62.94 |
Debt to assets ratio (%) | 41.83 | 37.06 |
2. Solvency
Analysis items | 2021 | 2022 |
---|---|---|
Current ratio (%) | 165.39 | 172.38 |
Quick ratio (%) | 117.81 | 119.70 |
3. Profitability
Analysis items | 2021 | 2022 | |
---|---|---|---|
Return on assets (%) | 12.93 | 6.05 | |
Return on equity (%) | 21.80 | 9.72 | |
Ratio to paid-in capital (%) | Operating income | 50.01 | 23.23 |
Pre-tax profit | 51.80 | 24.45 | |
Net profit margin (%) | 9.08 | 6.07 | |
Earnings per share (NT$) | 4.04 | 1.87 |
(III) Budget implementation: The Company did not disclose its financial forecast for 2022:
(IV) Technology and R&D Status:
The Company has many years of experience in engineering plastics manufacturing. We are mainly engaged in the production of nylon, polypropylene and PC and functional composite materials, and have developed various fiber reinforced and flame retardant grade composite materials for the manufacture of plastic parts for the automotive part, computer peripheral, and tool and hardware industries. We will continue to research and improve existing engineering plastics and invest in the development of high temperature nylon engineering plastic materials, and focus on the development of high strength, high thermal conductivity, electrical conductivity, electromagnetic shielding and other composite materials for semiconductor, automotive, notebook, tablet, and handheld electronic products, as well as LCD TV display bezel and mechanism materials. We use many high strength engineering plastics to replace metal parts to meet the requirements for light weight and small size and cross over to engineering plastics for electronics, communication, home appliances, and automotive applications.
In recent years, in response to the diversified demands in the market in the future, we have obtained the TS16949 certification and are committed to the certification and development of plastics for automobiles, electric vehicles and solar energy. We promote the development of GRS-compliant materials and meet the international requirements for green materials, and we are committed to technological development and the social environment. We plan to invest in the research and development of environmentally friendly recyclable materials and bio-based polymer materials. We also aim to improve the matrix marketing model of regions, industries, and major clients to increase market share.
II. Summary of the 2023 Business Plan
(I) Business objectives:
The continued revenue growth will be a major challenge in 2023 due to high uncertainty in the overall and external environment. However, orders reduced by clients due to inventory digestion in 2022 are expected to gradually return to normal. The Company will continue to develop new products and closely observes the client and terminal demand status to achieve better revenue performance than the previous year.
The Company will respond rigorously in the coming year by evaluating various institutional forecasts, paying close attention to the overall economic environment and market developments, strengthening core technologies, and providing existing clients with more complete solutions. We are committed to the R&D of high-value-added products such as high-temperature resistance, high-strength, and conductive engineering plastics to improve the Company's overall profitability. Based on the company's past business results, existing customers' orders, new product development progress, future market demand analysis, and the epidemic control situation in each country, we expect the Group's sales volume (20,000MT) to be the business target in 2023, and the estimated sales volume is growing compared to 2022.
(II) Important Production and Sales Policies and Business Strategies:
1.Competitive prices of products.
2.Short lead times from R&D finalization to mass production.
3.Sales staff capable of defining technology blueprints with R&D.
4.Sales staff capable of developing new customers and formulating separate marketing strategies for different fields, products, and regions.
(III) Management Policies:
1.Meet customers’ raw material needs.
2.Become a key partner in the electric vehicle, semiconductor, and metaverse industries.
3.Become the leading engineering plastics specialist in Asia.
III. Company's Future Development Strategy:
1.In line with the government's industrial development, we cooperate with academic research institutes and schools to establish R&D centers to develop new base resin materials, enhance the value of our products and expand the application of new materials.
2.Based on the strong foundry expertise in Taiwan's electronics industry, we are committed to the research, development and production of NY and high temperature NY and PC composite material production technologies in order to secure orders from major manufacturers in the connector and housing application demand for 3C products.
3.Aiming at the domestic and export markets in Mainland China, the parent and subsidiaries are actively developing automotive parts including water tanks, intake manifolds, bumpers, dashboards, and interior parts for supply to Taiwan, Mainland China, and overseas automotive repair markets, and further developing overseas repair markets to certify and sell.
4.We develop special functionality materials, focusing on semiconductor and new energy engineering plastics and highly filled glass fiber engineering plastics to meet the demand for plastic instead of steel.
5.The Company has been developing biomass plastic materials in line with the trend of environmental protection and is actively studying the application of recycled materials in engineering plastics to reduce carbon footprint, move towards net zero carbon neutrality, and contribute to the global promotion of carbon reduction.
IV. Effect of External Competition, Legal Environment, and Overall Business Environment:
1. External Competition:
The composite materials we produce and sell are used in a wide range of downstream industries. We continue to develop and innovate to meet the needs of each industry in order to compete with our competitors.
2. Legal environment:
The Company has always conducted the business legally and fulfilled its social responsibility, and has been able to comply with the changes in the legal environment by responding to the internal departments and personnel involved and by consulting with legal experts.
3. Overall business environment:
The mainstream of the engineering plastics market has been seeking for high stiffness, high strength, easy processing, thinness and lightness. Ginar has a strong research and development and sales team. In addition to traditional engineering plastics, we have also expanded our business into automotive electronics, communications, semiconductor, and high-temperature resistant engineering plastic materials. We have devoted our efforts to the manufacturing of flame-retardant engineering plastics to keep up with the market trend, customers' special functional needs and environmental requirements, to develop various functional engineering plastic materials to enhance the added value of our products, to comply with the environmental requirements of the European Union, to promote the development of GRS-compliant materials, and to pass the management system certification. We believe that in the future, Ginar will be able to effectively face any changes in the global business environment.