New Lines Ramp up to Kick-off Growth,
Smart Production for High Efficiency,
Market Driving Independent R&D,
Accelerate to Monetize Land Assets Hidden Value
Far Eastern New Century Corporation (Stock code: 1402, hereinafter referred to as “FENC” or “the Company”) held its 2017 Annual General Shareholders’ Meeting at the Taipei Hero House auditorium at 9:00 AM on 28 June with Chairman Douglas Tong Hsu presiding. During the meeting, the management team reported on the 2016 financial results and the operating strategies of key businesses – production, investments, and property development.
Despite a faltering global economy, heightened geopolitical tensions, stagnant oil prices and high volatility in foreign exchange in 2016, the Company delivered solid operating results. FENC’s consolidated revenue reached NT$215.9 billion (US$6.7 billion), whilst net income attributable to shareholders of the Company was NT$6.3 billion (US$195 million), or an EPS of NT$1.26 (US￠3.90). The cash dividend of NT$0.8 (or US￠2.48) per share was accepted during the meeting and reflects the Company’s commitment to a stable dividend policy. The cash dividend yield is 3.3%, based on the stock closing price of June 27, 2017.
Production Business: New Lines Ramp up to Kick-off Growth
1. The first phase of Vietnam fabric plant is in operation to maximize the vertically integrated production synergy
A supply deficit has emerged in the Vietnam fabric market due to faster than anticipated demand growth in apparel. FENC’s Vietnam fabric plant first phase, which has adopted the latest technologies with smart facilities to minimize production costs, is in operation. Combined with its downstream apparel plants, FENC will provide clients with total solution services supported by an optimal production site meaning shortened production lead time, rapid response to market requests, and benefits of all the global Vietnam’s trade tariffs.
2. Suzhou expansion in automobile and industrial materials to complete high-value added product portfolio
Seizing opportunities of high growth in the industrial materials demand for automobile and infrastructure businesses, FENC has expanded new production lines in Nylon 6,6 industrial yarns and tire cord fabrics in Suzhou to upgrade its current product mix.
3. Scale up green products and adopt sustainable production processes
FENC is one of the global leaders in green products, including recycling waste materials into fashion items, replacing fossil fuels with alternative clean energies, reducing resource consumption and developing eco-friendly nontoxic products. 25% of FENC’s 2016 production business revenue derived from green products and the Company plans to invest in several expansion projects in green products or eco-friendly production processes. “We have succeeded in developing yarns made from recycled ocean plastics which drew considerable attention from international media last year,” said the management team. “Looking forward, the second waterless dyeing plant in Taiwan is scheduled for commercial run in 2018, and we plan to more than double our recycled-PET capacity in five years.”
4. R&D powerhouse to introduce market driving innovative products
FENC houses an in-house R&D group of nearly 200 experts with 220 patents in various fields. With the pioneering products developed under its R&D efforts, the Company has garnered admiration and built long-term relationships with well-known brand clients. After developing the world’s first 100% Bio-PET bottle, FENC unveiled the world’s first 100% Bio-PET polyester shirt in 2016, which won numerous awards at home and abroad. FENC’s R&D power showcases its leading position in the green product area.
Property Development: Monetize Assets Hidden Value
Currently FENC 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. The Taipei Far Eastern Telecom Park (Tpark) project in Banqiao, New Taipei City, is one of FENC’s development priorities. After the completion of the phase I plan, an IDC and the second R&D buildings are in the construction pipeline. A premium residential project located inside Tpark, built by Far Eastern Construction, is planned to launch their pre-sale this year, with a gross floor area of more than 7,000 pings(23,000 square meters). The Mega Tower, the tallest skyscraper in New Taipei City, has become a new local landmark, boosting neighborhood prosperity. Going forward, the management team will focus more on the development of land resources, including 5.6 hectares in Wugu and 4.7 hectares in Kuanyin, to boost the value of the Company’s assets.
Diversified Investment: Branch Out to Create Advantages
FENC is the parent company of Far Eastern Group and encompasses a various quality investment portfolios, including listed companies Far EasTone Telecommunications, Far Eastern Department Store, Asia Cement Corporation, Oriental Union Chemical, Everest Textile, and Far Eastern International Bank etc. which bring stable cash dividend inflows each year. The diversified investment strategies mitigate the impact of the business cycle of any single industry. Using the current market prices of its listed companies, the total portfolio market value is around NT$140 billion (or US$4.3 billion). In consideration of the carrying costs, the unrealized gains can achieve approximately over NT$73 billion (or US$2.3 billion).
The book value per share of the Company on 31 March 2017 reached NT$ 35.6 (or US$1.10). Coupled with the unrealized gains to reflect the current market value of FENC’s listed investments, the book value of the Company should be above NT$ 49 (or US$1.52) per share, excluding the future land development value.
Social Responsibilities: Ongoing Sustainable Development
Leveraging its core strengths and resources, FENC has been promoting social well-being and has been awarded accolades globally for its CSR achievements. Just to name a few, FENC ranked in the top 5% of the listed companies in the third “Corporate Governance Evaluation” conducted by Taiwan Stock Exchange, was chosen as a constitute of the MSCI Global Sustainability Index Series & FTSE4Good Emerging Index, and won the “CSR Report of the Year 2016”, out of hundreds of companies, held by Taiwan Institute for Sustainable Energy.
“In response to the vicissitudes of the business environment, we will continue to pursue agile strategies with a global vision to lead in our industry and maximize our shareholder value” said the management team.
