Transforming To A Niche Enterprise Through Superior R&D
Far Eastern New Century Corporation (Stock code: 1402) (hereinafter referred to as “FENC” or “the Company”) held its 2014 Annual General Shareholders’ Meeting at the Auditorium of Taipei Hero House at 9 o’clock this morning. Chairman Douglas Tong Hsu presided over the meeting. During the meeting, the management team reported and elaborated on the 2013 financial results and operating strategies of key businesses – petrochemical-polyester-textile production, equity investments, and property development businesses.
For 2013, the Company’s consolidated revenues reached NT$ 238.9 billion, growing by 1% compared to the previous year. Net income attributable to shareholders of the Company is NT$ 7.2 billion, translating into an EPS of NT$ 1.50. Dividends of NT$ 1.50 per share (100% payout), comprising of a stock dividend of NT$ 0.20 per share from capital surplus and a cash dividend of NT$ 1.30 per share from retained earnings, was resolved to accept during the meeting and reflects the Company’s commitment of a stable dividend policy. The cash dividend yield is 4.1% based on the closing price of June 25, 2014.
Total equity increased by NT$ 83.7 billion, or NT$ 16.3 in book value per share, due to the first-time adoption of International Financial Reporting Standards in 2013 and the alteration to fair value model to measure investment properties starting from 2014. As a result, the Company’s total assets rises to NT$ 482.5 billion on March 31, 2014, an increase of 42% compared to that on December 31, 2012. Coupled with the unrealized gains to reflect the current market value of FENC’s equity investments, the Company’s book value is worth above NT$ 50 per share. Since renaming the Company to FENC in 2009, the Company’s consolidated revenues have grown by 43% over the past five years. The Company also anticipates rapid growth in revenues for its petrochemical-polyester-textile production businesses over the next three to five years, given its expansion plans accompanied by the anticipated industry recovery.
Petrochemical-Polyester-Textile Production Business: Focusing On the Four Strategies
FENC’s production businesses span across petrochemical, polyester, and textile industries with products covering all aspects of everyday life. Currently, the Company is the 2nd largest global supplier of non-woven polyester stable fiber and the 5th largest global supplier of PET resins. In addition, FENC is also a major global supplier of industrial grade PET resins used in tire cords, airbags, seatbelts in the automobile industry, and conveyor belts. During the meeting, the management team indicated major strategies listed below to ensure the continual success and leadership among industries:
Property Development: Unlocking Intrinsic Value by Expediting Development Progress
FENC currently has total land holdings of 560,000 pings in Taiwan and the majority of which is located in prime area of northern Taiwan. Of these land holdings, 210,000 pings are classified as investment property and the fair value model has been adopted for the measurement subsequent to initial recognition starting from this year. As a result, total equity increased by NT$ 83.7 billion, and book value per share has risen to NT$ 37.8 from NT$ 21.5.
Recently, the Company is focused on the development of land holdings in Banciao of New Taipei City and Jiaoxi Township of Ilan County. Mega City phase II commercial building in Banciao has received its license for usage, and is expected to open in the second half of this year; the opening will improve the asset value and start to book rental income henceforth. Taipei Far Eastern Telecom Park (Tpark) still has 90% of developable land and plans to build three commercial office buildings and one residential product. As for Ilan, a spa resort project has received its development permit and construction will begin shortly.
Investments: Actively Creating Value
FENC has a quality investment portfolio that brings stable cash dividend inflows each year. Using current market prices of its listed companies, the total portfolio is around NT$140 billion. In consideration of the carrying costs, the unrealized gains can achieve approximately NT$ 77 billion, translating into NT$ 15 per share.
Given the adopting of fair value model to measure investment properties since 2014, book value per share of the Company on March 31, 2014 reached NT$ 37.8. Coupled with the unrealized gains to reflect the current market value of FENC’s listed investments, the book value of the Company is worth above NT$ 50 per share without the consideration of the future land development value, price appreciation in listed investments, and improving contributions from its petrochemical-polyester-textile production businesses.
Corporate Social Responsibilities: Long-term Sustainability
Corporate sustainable development comprises three vital elements: employees, environment, and community. FENC values human capital by recruiting talents and new graduates and provides a 20% premium compared with the average job market offering. In 2013, the Company implemented “ColorDry” water-free dyeing technology and developed 100% Bio-PET products for environmental protection. Furthermore, the company hosts activities periodically to solidify its harmonious relationships with local communities.
FENC issued its first CSR Report last year and is the first domestic listed company within the plastics and textile industries to receive a third party validation. In addition, the Company was granted the award of “2013 Top 50 Taiwan Corporate Sustainability Awards - Excellence Awards in Manufacturing Industry” and “Corporate Sustainable Development Performance - Sustainable Innovation Award” by Taiwan Institute for Sustainable Energy. Furthermore, FENC was also awarded the “Global Views: Enterprise Environmental Protection Award” from Global Views Monthly Magazine this year.
“To prepare for the uncertainties present in the global economy, our target is to maintain the sustainable development of our company, to increase asset value through a multifaceted approach continuously, and to maximize the return for our shareholders,” said by the management team in the shareholders’ meeting.
