Dedicating to green business with commercial viability
Far Eastern New Century Corporation (“FENC”, or “the Company”) held its 2012 Annual General Shareholders’ Meeting at the Auditorium of Taipei Hero House at 9 o’clock this morning. Chairman Douglas Tong Hsu presided the meeting. Restructuring the management organization of the Company and the election of directors, independent directors, and supervisors were the primary purposes of this meeting, advocating the ambition of the management team to embrace the emerging business opportunities followed by the effectiveness of ECFA, a free trade agreement between Taipei and Beijing. In addition, the financial results of year 2011 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.
The Board of Directors at FENC had resolved to improve its management structure in 2011, and a number of General Managers were appointed to be responsible for different business segment. “During the post-ECFA era, FENC needs to re-define its domestic market, which no longer means Taiwan alone. The definition of domestic market, for FENC, literally means a market with a population of 14 billion, including both Taiwan and Mainland China. For quickly embracing the rising opportunities and accelerating the growth of the Company, a number of General Managers will be a must” according to Chairman Hsu, “and, incorporating independent directors into the Board is an important step for FENC to move toward the best corporate governance practices.”
According to the business report presented in the meeting, the financial results of FENC in year 2011 exceeded management’s expectation. The consolidated revenue rose by 18% YoY to NT$235.6 billion; meanwhile realizing a net income after tax of NT$11.1 billion, translating into an EPS of NT$2.26. The 2011 profit will be allocated as a cash dividend of NT$1.7 per share and a share dividend of NT$0.3 per share, representing a cash dividend yield of 5.7%. Despite the fact that the recent global market volatility further enlarged the difficulties in managing the business, the Company’s performance in 1Q12 turned out to be resilient as its consolidated revenue reached above NT$60.0 billion and its net income after tax grew by more than 200% compared to the previous quarter. The Company delivered an EPS of NT$0.60 in 1Q12, and it shall be a satisfactory result its shareholders.
FENC’s manufacturing business consists of Petrochemical, Polyester, and Textile Departments. The Company’s production line is well vertically-integrated, and it has production sites in both Taiwan and China. Oriental Petrochemical (Shanghai) and Oriental Petrochemical (Taiwan) comprise the Petrochemical Department, which currently manages factories with a total capacity of 1.7 million tons of PTA, a major raw material for the production of polyester products. Capacity expansion is necessary to be cost competitive in this commodity business; therefore, new lines in Taiwan and China are slated for commercial operation in 2013 and 2014, separately. Polyester Department currently operates with an annual capacity of 2 million tons, high value-added polyester products such as non-apparel and recycled/recyclable applications are the priority products that the Company is promoting and expanding. In order to become a global leader in the industry, FENC will continue to devote its R&D in the area of specialty product applications. Textile Department positions itself with the least distance to the broad market and plays a critical role in reaching end consumers by producing differentiated products with functionality. Dry-fit and recycled fabrics produced by the Textile Department not only were selected by Nike to use in the FIFA World CupTM for two consecutive years but also further promoted the concept of green environment to the general consumers across the world.
In light of the worsening problems of global climate change, and the increasing awareness of environmental conservation, reputable international brands such as Coca-Cola, Ford, Nike, and P&G have committed to the innovation and promotion of green products using bio-based PET resins in order to reduce reliance on petroleum-based feedstock. Moreover, the strategic direction of FENC is in line with the concept circular/cyclic economy emphasized by the 12th Five Year Plan of China as well as the prioritized Seven Newly Emerging Strategic Industries. At the R&D center of the Company, a new team dedicated to the environmentally-friendly materials was established in 2010. A special committee dedicated to the bio-based energy and bio-based materials was formed in 2011. The key purpose of these teams is to create and promote recycled PET resins and bio-based PET resins to meet the demand from our major customers; meanwhile, carry out the social responsibility of the Company. In 2011, FENC was awarded by Ministry of Economic Affairs (MoEA) of the “The Most Environmentally Friendly Company”. Products recognized by MoEA and allow the Company to be awarded include: 1) FEPOL®, a bio-degradable material used for packaging purpose for food and beverage; 2) Pro-GreenTM, a kind of recycled PET resins for food packaging purpose, and 3) recycled polyester fibers. FENC successfully turns the waste into resources, reduces the consumption of petroleum and the emission of green-house gas, and in the meantime, creates a niche market in which FENC is unrivaled by peers.
Equity investments generating considerable profit, promising results from developing the land assets
Equity investments have generated considerable profit to FENC. FENC owns a land bank with a total size of 560,000 pings (or 1.83 million square meters), and about half of these lands are available for development. The value of the land development, according to the self-estimate of the Company, will exceed NT$100 billions after activating all the land that can be developed under a conservative criteria.
The first phase of commercial area in T-Park was completed and began commercial operation in February 2012. Several international telecommunication related organizations, such as the research headquarters of Ericsson, have resided in the park, enhancing the clustering effect of the digital industry. “Taipei Far Eastern Telecom Park”, along with its neighboring Cloud Valley Industry Park, is expected to blossom and accelerate the development of the entire Banciao area.
Maintaining a consistent dividend policy, creating long-term profit for the shareholders
FENC is committed to maintain a consistent dividend policy to its shareholders, and such policy has attracted foreign investors as one of the best companies to invest. The Company’s dividend payout ratio and cash dividend yield are clearly above the market average, and it has gained the consensus among investors. Despite the growing volatility in the global economy and increasing competition in the business, “FENC will continue to generate consistent profit and make sure its shareholders better rewarded”, said by the management team report in the shareholders’ meeting.
In addition to the amendments of Articles of Incorporation, the 2011 business report and financial statements of the company were accepted by shareholders during the meeting. The profit allocation proposal (including a cash dividend of NT$1.7 per share and a share dividend of NT$0.3 per share, totaling NT$2.0 per share) and the resolution to capitalize the share dividends were approved. Proposed amendments of the company’s bylaws on “Procedures for Acquisition and Disposal of Assets” and “Meeting Rules of Stockholders” were also resolved to be approved.
Last year, FENC was once again awarded as “The Most Admired Company” in the industry. At the same time, the Company also received the reward of “The Best Company in the Taiwan District” from the “TOP 1000 Global Chinese Companies” of Asia Weekly. As the only one in its category, not only does FENC demonstrate its capability and capacity but also sets an example for its peers.
