Far Eastern New Century Corporation (Stock code: 1402, hereinafter referred to as “FENC” or “the Company”) announced its 2016 first quarter financial results; FENC’s consolidated revenues reached NT$ 51.6 billion, whilst net income attributable to shareholders of the Company was NT$ 0.83 billion, or an EPS of NT$ 0.17. Comparing to the same period of 2015, the declining revenue and net income year over year can be attributable to the turbulent changes in global economy, including the FENC’s falling product prices due to oil prices fluctuations, and currency risks due to an influx of hot money in the emerging countries, such as the appreciation of New Taiwan Dollars causing FENC’s foreign exchange losses. Looking forward, FENC’s management team indicated a brighter outlook. “The second quarter is the traditional high season of our Production Businesses (including the petrochemical, polyester and textiles businesses). With the expectation of increasing selling prices and volume in the Production Business, along with better investment income from our affiliated companies (i.e. Asia Cement), as well as the stable exchange rates expected, we believe the operational performance will be significantly improved in the second quarter 2016”. The Company’s book value per share is NT$36.5 in 1Q16, given the current FENC’s stock price, it can be viewed as a value stock with the low P/B ratio of 0.61.
Regarding the future operations, the Company signaled an increase in the product average selling price (ASP) due to the recovery of oil prices reach US$40 per barrel and above. Combining the upcoming high season for the Production Businesses, FENC’s growth momentum lies in its upgraded product mix with enlarging portion of value added products, and their revealing R&D results for functional products. Moreover, the latest Vietnam expansion project, which has been planning to build 72 apparel production lines, has started its first phase commercial run since second quarter. Regarding FENC’s investments, the supply and demand situation of cement market in the Yangtze River basin has improved, and the Asia Cement (China) has turned losses into profits in April due to the rising local cement prices. On the other hand, FENC also expected stable growth in the retail and telecommunications businesses.
While facing the economic stagnation and the lack of business investment in Taiwan, FENC’s management team shows their confidence in the Taiwan’s new leader. “We believe the new government will set up effective policies to stimulate economic growth. We have strong confidence in the Taiwan’s business environment and will continually support our government to improve the Taiwan’s competitiveness in the international market.”
