Rongcheng Reports NT$243 Million Profit in First Half, Turning from Loss to Profit; Cautiously Optimistic Outlook for Peak Season in Second Half

Rongcheng (1909-TW) held its earnings conference today (14th). For the first half of this year, cumulative after-tax net profit reached NT$243 million, turning profitable compared to a loss in the same period last year, with earnings per share at NT$0.19. Rongcheng stated that entering the traditional peak season in the second half is expected to boost demand for industrial packaging paper, leading to a cautiously optimistic outlook for second-half operations.

Rongcheng noted that the second half includes seasonal demand drivers such as the Mid-Autumn Festival, National Day holidays, e-commerce shopping festivals, and overseas Christmas inventory buildup, all of which are expected to increase demand for industrial packaging paper. Additionally, China's exports grew double digits in the first half, and the e-commerce logistics and express delivery markets continue to expand, providing solid support for packaging paper demand in the second half.

Regarding the Chinese market, Rongcheng pointed out that positive signals emerged starting in the first quarter, including a rebound in industrial paper prices, improved supply-demand dynamics, and major paper mills maintaining stable supply. Price competition has gradually eased.

Although industrial paper prices in late July to early August experienced some correction from the higher increases seen in the second quarter, Rongcheng emphasized that overall supply-demand conditions remain healthy, with industry inventory days staying relatively low. No significant weakening in demand has been observed. Depending on restocking activity during the peak season, paper prices still have room to rise. Overall, the company believes the Chinese market has emerged from several years of economic downturn and is gradually improving.

On the progress of asset monetization at the Nankan plant, Rongcheng confirmed that it is proceeding according to plan and revealed that there are already potential buyers expressing interest.

Regarding the announcement on Wednesday (12th) to transform into a holding company, Rongcheng reiterated that all operations will continue as usual from now until the effective date of January 4 next year. After the transformation takes effect on January 4, existing manufacturing and operational businesses will be transferred to a newly spun-off subsidiary. Existing factories, production lines, customer relationships, and supplier partnerships will remain intact and seamlessly transitioned.

For the first half of this year, Rongcheng recorded cumulative revenue of NT$24.247 billion, a 13% year-on-year increase. Gross margin was 10.9%, up 1.6 percentage points year-on-year. Operating margin turned positive at 1%, compared to a loss last year. Net profit after tax reached NT$243 million, reversing from a loss, with earnings per share at NT$0.19.