CAT Paper Screening Sample An industry and company analysis Performance Apparel: Eclat Textile
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CAT Paper Screening Sample
An industry and company analysis
Performance Apparel: Eclat Textile
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CAT Paper Screening Sample
Industry Overview Value Chain Key Players Case Study Financials
Overview on the Performance Apparel Industry
• Performance Apparel is technologically engineered apparel that uses performance fabrics to perform specific functions. It is more applicable to sport-use and outdoor-use
• Common functions include UV-protection, quick-dry, and temperature control
272.4 282.3 301.0 321.5 343.3 366.8 389.6
2015 2016 2017E 2018E 2019E 2020E 2021E
Sportswear Retail Value ($USD Bn)
4.58
39.70
6.30 2.23
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
China US Japan United Kingdom
Sales of Performance Apparel in major countries($USD Bn)
Noticeable trends of performance apparel in trends in major countries
UK: Strong sales performance attributed to growing participation in sport and exerciseChina: Mass-market for performance apparel is quite saturated, manufacturers are investing to differentiate throughhigh-tech fabricsJapan: Although performance sportswear dominates overall sales, many consumers are unconvinced by the need to pay more for these products
CAGR 7.8% 3.1% 2.5% 4.0%
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CAT Paper Screening Sample
Industry Overview Value Chain Key Players Case Study Financial
Typical Supply Chain in Performance Apparel Industry
Major BusinessModel
• Original Equipment Manufacturer
• Original Brand Manufacturer
• Original Design Manufacturer
Examples• Nike• Under Armour• Lululemon• GAP
Examples• Etnylene Glycol (EG)• Caprolactam (CPL)• PnenylTeredimethane
Acid (PTA)
Examples• Wool• Nylon• Cotton• PE
Examples• UV-protective• Quick-dry• Temperature
control
Plastic Materials(Petrochemical Company)
Artificial (or Natural) Fiber Production(Fiber Manufacturer)
Performance FabricProduction
(Fabric Manufacturer)
Apparel Dyeing andFinishing
(Apparel Manufacturer)
Apparel Brand(Distributor, retailer)
DownstreamUpstream
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CAT Paper Screening Sample
Industry Overview Value Chain Key Players Case Study Financial
The four Taiwan-based players dominating the industry
Plastic Materials(Petrochemical Company)
Artificial (or Natural) Fiber Production(Fiber Manufacturer)
Performance FabricProduction
(Fabric Manufacturer)
Apparel Dyeing andFinishing
(Apparel Manufacturer)
Apparel Brand(Distributor, retailer)
DownstreamUpstream
Far Eastern New Century
Formosa Taffeta
Eclat Textile
Hakers Enterprise
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CAT Paper Screening Sample
Industry Overview Value Chain Key Players Case Study Financial
Business Overview of Eclat Textile
Eclat Textile is a Taiwan-listed company that produces flexible performance fabric varieties andprofessional performance apparels that would enhance the consumer's living quality
Eclat Textile’s business mainly focus on Knitting, Dyeing, Finishing and Garment Making
Major Customers
Business Overview
Diversified business, with no single customer contributes >10% of sales
Comparative Advantage: Vertical Integration
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KNITTINGProvide worldwide known fabrics with good elastic performance and multi-functionality
DYEINGUse equipment and operation procedure to either yarn dye or piece dye products
FINISHINGWork with well-known chemical suppliers and induce multi-functions into final goods
GARMENT MAKING
YARN SUPPLIERS
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CAT Paper Screening Sample
Industry Overview Value Chain Key Players Case Study Financial
Recent Development of Eclat Textile
Latest Comp. Actions Est. Impacts Brief Implications
Eclat announced that they will explore e-commercemarket, analysts predict the clients is Amazon
9/8/17 The margin of e-commerce clients is higherthan conventional clients (e.g. Nike), it can
boost the volume with its extensive network+ve-ve
Eclat put strategic focus on vertically integrating supply chain, as well as provision of an ODM model
8/8/17 While this potentially diversifies business lines and creates future opportunities, it implies
increasing exposure to more niche companies+ve-ve
Reference• https://udn.com/news/story/6811/2631700• https://udn.com/news/story/7252/2629923• https://money.udn.com/money/story/5612/2629383• http://www.chinatimes.com/newspapers/20170804000160-260204
Eclat announced expansion of garment production lines, and construction of new cloth factories
8/8/17 The production capacity will increase to meet expected increasing demand, yet expansion
implies higher capital expenditure+ve-ve
Eclat announced investment of 1 billion in buildingnew digital textile printing factories (~4500 sq. ft.)
4/8/17 With digital textile printing, fabric price isexpected to exceed USD$3/yard, which
increases the operating margin+ve-ve
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CAT Paper Screening Sample
Industry Overview Value Chain Key Players Case Study Financial
24.618.8
12.88.3
Shenzhou Intl Eclat Texwinca Victory City
Operating Profit Margin
6,110 8,907
12,059 13,333 16,614 16,225 4,525
4,643
6,069 7,503
9,326 8,300 11%
13%
15%14%
16%15%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
-
5,000
10,000
15,000
20,000
25,000
30,000
2011 2012 2013 2014 2015 2016
Garment Fabrics Net Profit Margin
Eclat Textile’s financial performance and key drivers
Revenue Breakdown and NP Margin(NTD mn)
Financial Comparison with major peers
Avg: 16.1
16.222.3
14.1 3
Shenzhou Intl Eclat Texwinca Victory City
Return on Invested Capital
Avg: 13.9
Key Drivers
Fabrics internal sourcing ratio increases by 4-5%, while outsourcing ratio of garment drops by 5% due to the new added capacity
Company acquired 3 new clients (US, Canada & global based), which has contributed 5-6% of revenue in 2017 and 15-20% in 2018
Company improved its average selling price due to its product upgrade and higher sales in functional fabrics
Source: Daiwa Equity, Credit Suisse, Company Annual Report
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