Letter to Shareholders
First of all, I would like to thank you all for your support to Ginar. Here is a report on the operating results of the Company for the year ended December 31, 2023.
For 2023, the Company's consolidated net operating revenue was NT$1,558,372 thousand, down by NT$143,215 thousand, or 8.4% year-on-year, compared to the consolidated net operating revenue of NT$1,701,587 thousand for 2022; due to the decrease in revenue and the decrease in profit in 2023 compared to the same period of the previous year, the after-tax earnings per share is NT$1.55.
The revenue and profit in 2023 declined year-on-year, mainly because the high interest rate environment continues to suppress consumption and investment momentum in the petrochemical market in 2023, resulting in weak end demand; at the same time, the economic recovery in China after the lockdown is not as good as expected. Furthermore, the Chinese petrochemical industry continuing to increase production capacity, resulting weak pricing of petrochemical products due to "weak demand and expanded supply".. Domestically, part of the decline was due to the announcement of the Chinese Ministry of Commerce on August 14, 2023, imposing anti-dumping duties ranging from 16.9% to 22.4% on Taiwan polycarbonate (PC plastic) starting from August 15, 2023. After the imposition of anti¬dumping duties, these products became uncompetitive in price, affecting orders for exports to the Mainland customers.
For 2024, according to the survey by forecasting institutions, most vendors remain optimistic about the outlook for market demands. Export markets such as China, Southeast Asia, and India should have the opportunity to recover. Therefore, the shipment volume of the petrochemical industry in 2024 should increase compared to 2023. In line with the market's forecast on the recovery of the petrochemical industry, the Company will continue to work on the development of new products and closely observe the status of customer and end-user demand, and expects that this year's revenue will be better than last year's.
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 customers 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 2023 and its business plan for 2024.
2023 Business Report:
(I) Implementation result of the business plan:
For 2023, the Company's consolidated net operating revenue was NT$1,558,372 thousand, down by NT$143,215 thousand, or 8.4% year-on-year, compared to the consolidated net operating revenue of NT$1,701,587 thousand for 2022; in terms of profitability, net profit after tax was NT$85,378 thousand, down by NT$17,955 thousand from the net profit after tax of NT$103,333 thousand for the previous year, and after-tax earnings per share was NT$1.55.
(II) Consolidated financial receipts, expenditures, and profitability:
1. Financial structure
| Analysis items | 2022 | 2023 |
|---|---|---|
| Equity to assets ratio (%) | 62.94 | 59.51 |
| Debt to assets ratio (%) | 37.06 | 40.49 |
2. Solvency
| Analysis items | 2022 | 2023 |
|---|---|---|
| Current ratio (%) | 172.38 | 158.84 |
| Quick ratio (%) | 119.70 | 114.01 |
3. Profitability
| Analysis items | 2022 | 2023 | |
|---|---|---|---|
| Return on assets (%) | 6.05 | 5.38 | |
| Return on equity (%) | 9.72 | 8.34 | |
| Ratio to paid-in capital (%) | Operating income | 23.23 | 16.77 |
| Pre-tax profit | 24.45 | 18.95 | |
| Net profit margin (%) | 6.07 | 5.48 | |
| Earnings per share (NT$) | 1.87 | 1.55 | |
(III) Budget implementation: The Company did not disclose its financial forecast for 2023:
(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 customers to increase market share.
Summary of the 2024 Business Plan
(I) Business objectives
For 2024, according to the economic survey conducted by the Taiwan Institute of Economic Research, the majority of manufacturers maintain an optimistic outlook on the market demand prospects for the coming year. Export markets such as China, Southeast Asia, and India should have the opportunity to recover. Therefore, there may be an opportunity for the shipment volume of the petrochemical industry to increase in 2024 compared to 2023. Therefore, it is anticipated that the petrochemical industry's economy in 2024 should show signs of recovery from the trough in 2023. 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 customers 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 of 20,000MT to be the business target for 2024.
(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.
The 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.
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.
I wish you and your family all the best!
Chairperson: Chun-Chung Chung
