Accelerate innovation and transformation of corporate structure
While enhancing the value of its diversified assets
Far Eastern New Century Corporation (“FENC”, or “the Company”) held its 2013 Annual General Shareholders’ Meeting at the Auditorium of Taipei Hero House at 9 o’clock this morning. Chairman Douglas Tong Hsu presided the meeting. In addition, the financial results of year 2012 were reported, and the operating strategies at key business territories – manufacturing of polyester products, equity investments, and property developments, were elaborated by the management team.
Although 2012 had been a challenging year for the global economy, FENC managed to maintain the growth trend in its businesses. According to the business report presented in the meeting, the consolidated revenue continued to exceed the previous high as it rose by 2% YoY to NT$240.4 billion (US$8.01 billion); meanwhile realizing a net income after tax of NT$8.7 billion (US$290 million), translating into an EPS of NT$1.73. The 2012 profit will be allocated as a cash dividend of NT$1.3 per share and a share dividend of NT$0.2 per share, representing a cash dividend yield of 4.2% (based on the closing price of 21 June, 2013).
Regain growth momentum in the polyester industry
FENC’s manufacturing business consists of Petrochemical, Polyester, and Textile Industries. The Company’s production line is well vertically-integrated, and it has production sites in both Taiwan and China. Oriental Petrochemical (Shanghai) Corporation (OPSC) and Oriental Petrochemical (Taiwan) Co. Ltd. (OPTC) comprise the Petrochemical Industry which conducts the production of PTA, a major raw material for the production of polyester products. Petrochemical Industry manages to ensure stable supply of raw materials (PTA and EG) while retaining the competitive advantage of inter-group vertical integration of its production line. Polyester Industry is a major global supplier of solid state polyester (PET) and non-apparel staple fiber. In order to become a global leader in the industry, high value-added polyester products with specialty applications such as bio-based PET (Bio-PET), recycled PET (R-PET), and functional fibers are the priority products that the Company is promoting and expanding. Textile Industry, with its upgraded production techniques and being the least distant to the broad market, has established consistent collaboration with international first-tier clothing brands while reaching end consumers worldwide with its innovative fabrics. Industrial fabrics produced by the Textile Industry has met requirement for being used in the production of airbags and lightweight conveyor belts with the growing application in the future. Last year, the polyester industry was affected by the macro business environment which caused a slowdown in the industry growth. In 2013, as global economy gradually recovered and the improving market condition, the polyester demand growth rate will return to 6%. Throughout the years, FENC has committed relentless efforts to maintain its leading position in the polyester industry, and provide the most consistent strategic alignment with reputable international brands. In 2013, with an outstanding evaluation result among the 900 companies from all around the world, FENC was honorably awarded by Coca-Cola of the “Global Sustainable Procurement (GSP) – Supplier of the Year”.
Business expansion into Japanese market and participation in 2014 FIFA World Cup Brazil while optimizing corporate management
In 2012, after years of being committed to innovation and development of green products, FENC successfully positioned itself in the Japanese market, and will participate in the local distribution channel with its recycled PET (R-PET). Due to the high entry barriers of R-PET, it will likely be difficult for industry competitors to easily enter this area of business. In light of the increasing awareness of environmental conservation, FENC has devoted its R&D efforts in developing environmental-friendly packaging materials such as R-PET and bio-based PET (Bio-PET) in order to reduce reliance on petroleum -based feedstock. The Company has a main focus on the expansion of R-PET which is made of recycled PET bottles. Since 2013, FENC has planned to add new production lines for R-PET worldwide, and the new plant construction in Japan has commenced. Currently, FENC is ranked 3rd globally in terms of R-PET capacity, and the Company’s goal is to become a leading R-PET producer in the world.
Dri-FIT and recycled fabrics produced by FENC not only were selected by Nike to use in the FIFA World Cup for two consecutive years but also Nike assigned the Company the responsibility for the design and manufacturing of the jerseys for a number of national teams. The 2014 FIFA World Cup will be held in Brazil, and FENC is once again selected by Nike to participate in this major world event with its innovative recycled fabrics while carrying out the social responsibility of the Company.
In order to alleviate the rising cost pressure derived from fuel and electricity price increase, FENC plans to complete the construction of the largest coal water mixture (CWM) plant in Taiwan this year. The cost saving from the implementation of CWM is equivalent to 30 ~ 40% less than the traditional production method. Since the business operation of FENC has been expanding in both China and Japan, FENC is the first company in Taiwan to issue both Formosa Bond and Yen Bond. FENC not only demonstrates its innovative thinking but also attain the capital denominated in foreign currency, in order to improve financial structure of the Company and reduce currency risk.
Reactivate a new land development pipeline in Banqiao
FENC owns a land bank with a total size of 560,000 pings. 200,000 pings of which are available for development. According to the market estimate, the incremental value of its land development is expected to exceed NT$110 billion (US$3.66 billion), translating into a book value per share of NT$22, after activating all the land that can be developed under a conservative criteria. For the time being, the main focus of its land development is in Banciao, New Taipei City. In 2010, Taipei Far Eastern Telecom Park (T park) began commercial operation, and international telecommunication companies, for instance, the headquarter of Ericsson, has been set up at the No.1 commercial office building (TPK-A). The headquarter and IDC building of Far EasTone, and the second R&D building (TPK-D) will break ground in the second half of 2013. FENC also plans to launch a new residential project on Yuandong Rd, and start the initial sales in 2014 with more than 7,000 pings in total. Banciao A-Mart next to Guixing Rd is scheduled to complete and begin commercial operation in the fourth quarter of 2013, which will achieve life-style-convenient function within the region. FENC controls interests of a sizeable and diversified investment portfolio including businesses in property, cement, retail, and telecommunication etc., Among its investments, the market value of listed companies has reached NT$140 billion (US$4.66 billion), translating into a book value per share of NT$15.
Create long-term profit for the shareholders
Last year, FENC was once again awarded by CommonWealth Magazine of the “Most Admired Company” in its industry while fully demonstrating its capability and capacity. Despite the growing volatility in the global economy, “FENC will continue to maximize the shareholders’ value and make sure that FENC is one of the best companies to invest in.”, said by the management team report in the shareholders’ meeting.
*US$ amount based on the exchange rate of NT30.031/USD on 6/21/2013
