Far Eastern New Century Corporation (the Company, or “FENC”) held its 2010 Annual General Shareholders’ Meeting
at the Auditorium of Taipei Hero House this morning at 9:00. Chairman Douglas Tong Hsu presided the meeting; the management team reported the 2009 operating results, and presented the prospects and strategies of the Company, with respect to its main business areas – petrochemical, polyester, property development, and equity investments.
“Despite of the fact that the global economy had gone through an unprecedented recession in year 2009,” according
to Chairman Hsu, “FENC managed to deliver a financial result showing tremendous growth compared to 2008.” The revenue of FENC, based on the presentation by the management, achieved NT$41.9 billion and NT$167 billion on the parent-alone and consolidated basis, respectively. The net income rose to NT$8.1 billion, increasing by a dramatic amount of NT$3.5 billion, or 76%, compared to 2008, translating into an earnings per share of NT$1.74. The performance of 1Q10 was even more impressive. The revenue of the Company on parent-alone basis rose to NT$12 billion, and the operating results, with the relentless efforts of the management team, turned from negative to positive, resulting in a net income of NT$2 billion. The earnings per share in 1Q10 alone was NT$0.43. Both the revenue and
the net income posted a growth rate of 32% year on year.
“An upside potential of significance will likely occur at the operating level of the Company”, according to President Johnny Shih. Year 2009 was the sixtieth anniversary of the Company after being relocated to Taiwan. When commemorating its anniversary, FENC announced “an aggressive operating target, aiming to double its revenue
from petrochemical and polyester businesses.” said by the President Shih, “And three specific strategies have been schemed for achieving this target; they are: 1) Expand capacity aggressively; 2) Create new applications for environmentally friendly materials; and 3) Capture market shares in China.” Based on the further elaboration by President Shih, the production capacity of petrochemical, polyester, and apparel businesses in both China and Taiwan of the Company will be upgraded over next five years. In particular, a new PTA (Pure Terephthalic Acid) line and a new polyester plant, both using the most advanced technology and with the largest capacity for a single production line in the world, are being planned, ahead of peers of the Company, in order to ride on the recovery of the global economy. Moreover, the R&D Institute of the Company will focus on the innovation of applications for green materials, including recycled, bio-based, and bio-degradable, facilitating the Company as the leader of conserving the environment in the polyester industry. Most importantly, given the remarkable growth potential, the Company will intensify its sales efforts
in China domestic market, to promote high value-added products, such as fibers or fabrics for industrial purposes, PET packaging materials, and high-end sports wears, in hopes of boosting its overall market share in China.
In addition to the bright future, outlined by President Shih, of the Company’s operating business, Chairman Hsu believes affiliate earnings booked by FENC will be a rock-solid downside protection to the bottom line of FENC in year 2010. Taipei Far Eastern Telecom Park, with a total size of 76,000 pings in Banciao, the outskirt of the Taipei City, “will begin to harvest from developing efforts made several years.” The first residential product, named California Dream, adjacent to the MRT Far Eastern Memorial Hospital Station, was offered to the market in the fourth quarter last year,
“and the pre-sale result turned out to be very satisfactory”, said Chairman Hsu. The average selling price has climbed over NT$400,000 per ping, recording the highest unit price in the neighborhood area. “We estimate part of the gain from the pre-sale of this product, roughly NT$1.2 billion, would be booked in the first half this year, and the remaining would be recognized in the second half according to the percentage-of-completion accounting method”, said Chairman Hsu. Meanwhile, the construction of the first commercial office building (TPKA-1) has been completed; the tenants are scheduled to move in and the official operation will commence in the middle of this year.
The investment income of FENC from other equity holdings in the first quarter of 2010 rose as well compared to the same period of 2009. “Each subsidiary employs innovative strategies to seize opportunities for growth in the current challenging business environment,” said Chairman Hsu. According to Chairman Hsu, an aggressive expansion strategy has been implementing in the cement business; the cement output volume has been increasing substantially through organic growth and mergers and acquisitions, and the operating performance was unrivalled by its cement peers. The retail business has been accelerating its expansions in China and Taiwan in order to achieve the optimal store numbers in the greater China area. The telecommunication business has accomplished the convergence of wireless and broadband fixed-line businesses, offering a comprehensive service package for its subscribers. Being
the first mover into the 4G WiMAX service among its Taiwan peers, the telecommunication business has provided its enterprise and household customers an alternative for connection to the Internet.
Starting from a small yarn mill, “FENC has run its business in Taiwan more than sixty years and successfully upgraded itself into one of the leading enterprises listed in the Taiwan Stock Exchange”, Chairman Hsu stressed. “The Company is well-recognized as one of the most immensely favored companies in Taiwan, which can be evidenced by the increasing number of shareholders exceeding 100,000 persons this year. We would like to take this chance to show our great and sincere gratitude to our shareholders for their admiration and support.”
During the shareholders’ meeting, the 2009 business report and financial statements of the Company were accepted by shareholders. The profit allocation proposal (including a cash dividend of NT$1.3 per share and a share dividend of NT$0.2 per share, totaling NT$1.5 per share) and the resolution to capitalize the share dividends were approved. Proposed amendments on Articles of Incorporation, bylaws on “Procedures for Lending of Capital to Others” and “Procedures for Endorsements and Guarantees” of the FENC were also resolved to be approved. The meeting was concluded successfully by noon on the date of 22 June.
