Far Eastern New Century Corporation (Stock code: 1402, hereinafter referred to as “FENC” or “the Company”) held its 2016 Annual General Shareholders’ Meeting at the Auditorium of Taipei Hero House at 9 o’clock this morning with Chairman Douglas Tong Hsu presiding. During the meeting, the management team reported on the 2015 financial results and the operating strategies of key businesses – production, investments, and property development.
Despite the weak global economy in 2015, amid plunging oil prices and the fluctuations in foreign exchanges, the Company delivered consistent operating results. FENC’s consolidated revenues reached NT$217.9 billion(or US$6.8 billion), whilst net income attributable to shareholders of the Company was NT$8 billion(or US$248 million), or an EPS of NT$1.61(or US￠5.00). The cash dividend of NT$1.0(or US￠3.10) per share was accepted during the meeting and reflects the Company’s commitment to a stable dividend policy. The cash dividend yield is 4.3% based on the closing price of June 22, 2016.
Production Business – Focusing on Four Strategies to Strengthen the Leadership
Levering its polyester business, FENC has achieved a vertically integrated production process from securing its upstream key feedstocks to providing its downstream clients with a comprehensive product portfolio. Looking forward in 2016, the utilization rate of the polyester industry is expected to recover with a production growth rate of 5% (Source: PCI), slightly higher than the global economic growth forecast of 3.2% (Source: International Monetary Fund), and providing a brighter outlook in the business. Besides deepening its presence in existing markets, FENC expressed its ambition to enter new markets as well. The Company also mentioned its continued cooperation with its many international brand customers by providing differentiated, high value-added and green products.
The management team outlined its four strategies during the meeting, including scale-up, smart manufacturing, sustainable production and R&D innovation:
1. Scale-up – Launch the Vertically Integrated Expansion Plan in Vietnam
With eyes on Vietnam’s duty-free access to all Trans Pacific Partnership (TPP) markets, FENC has enlarged its expansion plan up to US$760 million for a vertical integrated production site in Vietnam, which was designed to manufacture various products in the PET resins and polyester fibers value chain. Combined with its downstream knitting, dyeing, finishing and apparel plants, FENC will benefit not only from zero tariffs but also production lead time reduction.
2. Smart Manufacturing – Establish Industry 4.0 Smart Supply Chain
FENC has adopted smart manufacturing facilities and processes, established smart supply chains from petrochemical via polyester to textiles. It also introduced Industry 4.0, such as automation, computerization of manufacturing, virtualization, real-time monitoring and use of big data, etc. With integrated solutions in production and sales planning, FENC will lift its production efficiency and managerial effectiveness in order to develop its cutting edge competitiveness.
3. Sustainable Production – Increase the Green Product Capacity
FENC has developed various green polyester materials, and recycled polyester (rPET) is one of its main products. In addition to its current capacity in Taiwan and Japan, the Company plans to increase its rPET capacity by more than 50% over the coming three years in order to maintain its leading position in the industry.
4. R&D Innovation – Focus on Green Materials and Smart Technologies
Along with producing the world’s first 100% bio-PET bottle in 2014, FENC this year announced the first 100% bio-polyester shirt made entirely from plants and won global recognition. Moreover, utilizing ultra-thin conductive carbon nanotube based polymer film, FENC has developed the DynaFeed, a revolutionary smart garment system with bio-sensing technology and an IoT platform, which was awarded the ISPO Asian Gold Award at the prestigious ISPO Textrends Exhibition, and has opened up unlimited applications for smart textiles.
Investments – Diversified Portfolio to Generate Consistent Income
FENC owns a sizable and diversified quality investment portfolio, including listed companies Far EasTone Telecommunications, Far Eastern Department Stores (FEDS), Asia Cement, Oriental Union Chemical, Everest Textile, Far Eastern International Bank. The Company’s investment portfolio not only brings stable cash dividend inflows each year but also implies a significant potential capital gain for the Company. Using the current market prices of its listed companies, the total portfolio market value is around NT$130 billion(or US$4.0 billion). In consideration of the carrying costs, the unrealized gains could reach approximately NT$66.4 billion(or US$2.1 billion), or NT$ 12.4(or US$0.38) per share. Each of FENC’s invested businesses has innovative growth strategies for the long term, and their share prices are expected to reflect their future growth.
Property Development –Expediting Development Progress to Unlock Land Value
FENC currently has total land holdings of 570,000 pings (1,900,000 square meters) in Taiwan, the majority of which are located in prime areas of northern Taiwan. Taipei Far Eastern Telecom Park (Tpark) project in Banqiao of New Taipei City is one of FENC’s development priorities. Construction on the phase I plan has been completed and is in operation, and construction of three office buildings is in the pipeline. In residential housing projects, the Far Eastern Construction Residential Building in Tpark is slated to be put pre-sale to the public this year and Mega Tower, the tallest skyscraper in New Taipei City, was officially opened last year and serves not only as FEDS’s headquarters, but also as a shopping mall and sky dining restaurant. These projects have prospered while increasing land values in the Banqiao area.
Social Responsibilities – Highlight Worldwide Sustainability Issues
FENC published its second CSR report “Inventing – New Century” last year and was awarded several local and international CSR prizes due to its sustainability performance management. Furthermore, supported by the Far Eastern Group, FENC hosted a water themed exhibition “Taiwan Water, Fountain of Life”, which aligned with the goals of the United Nations’ “Water for Life Decade” to successfully draw the public’s attention to conservation of water resources.
“With 66 years of experience in the industry, FENC has prospered in the past and will continue to pursue innovative strategies to maximize our shareholder value”, said the management team.
