Far Eastern Textile Ltd. (FETL) held its 2009 annual general shareholders’ meeting at the Taipei Hero House on 26 June. Chairman Douglas Tong Hsu presided the meeting and addressed to shareholders, with regard to the company's efforts to solidify its leadership in the vicissitudes of market. The management reported the 2008 operating results. All resolutions proposed by the Board were accepted by shareholders presented, and Directors and Supervisors were re-elected and appointed within the meeting.
The economic downturn, according to the management reports, had little impact on the performance of FETL's core business, polyester and textile, which achieved record-high revenue historically, with a gross margin of 10% in 2008. Meanwhile, FETL chose a conservative method to value its equity investments during the period of financial uncertainty, leading to a reduction of affiliate earnings of NT$5.7bn. Despite of this fact, the company still managed to achieve a net income of NT$4.6bn in 2008, translating into an earnings per share (EPS) of NT$1.01, a result significantly outperforming its peers.
While addressing to shareholders, Chairman Hsu indicated his strong confidence that the worst situation for the company was past, evidenced by the substantial improvement at the company's net margin, from a negative 2.5% in 4Q08 to 4.2% in 1Q09, and the EPS rose to NT$0.33 in 1Q09, representing the best performance in past four quarters. Moreover, Chairman Hsu expressed his positive commitment, saying he believed the company's earnings would remain on the upward trend in 2Q09 and beyond, on the grounds of FETL's well-designed strategy and prudent executions carried out.
Further elaborated by Chairman Hsu, FETL's position in the polyester industry would be unrivaled for three reasons: economy of scale, vertical integration, and consistent upgrade of product mix. With an annual capacity of 1.7mn tons, FETL is known as one of the top three polyester producers worldwide, and is the largest provider of PET resins, sheets, and industrial fibers in Asia. The management is planning to add capacity at both Taiwan and Shanghai sites, aiming for a total output of 2mn tons/year. FETL has achieved vertical integration at its polyester production. Since its successful acquisition in 4Q08 of a mega facility of PTA, a chemical material consumed for the polyester production, FETL has had control over a PTA capacity of more than 1.6mn tons/year across the Taiwan Strait. The company also makes consistent efforts in upgrading its product mix, retiring the aged plants and re-deploying its resources to expand the output of higher value-added applications. As of end 2008, three quarters of the company's polyester revenue were derived from the newly created non-textile polyester products, differentiating FETL's market position from other fiber-only makers. In 4Q08, FETL launched an innovated application, a PET-made beer bottle named as CoolerPakTM, in the Shanghai market. CoolerPakTM is light-weighted, easy to be transported, and safer for consumers comparing to conventional glass bottles. More importantly, PET beer bottles are recyclable, help preserving natural resources and waste reduction. “This innovation demonstrates the world FETL's ability to combine environmental conscience and commercial viability perfectly”, said Chairman Hsu.
What reinforces Chairman Hsu's positive outlook is the substantial hidden value from FETL's equity investment holdings, including telecommunications, cement, retail and other businesses. To name the publicly listed ones, this equity portfolio comprises more than 40% stakes in Far EasTone, and about 20% in Asia Cement, Far Eastern Department Stores, and Oriental Union Chemical, respectively. The combined market capitalization of this portfolio has appreciated by more than 60% in only past four months, and a proportional realization of this hidden value would enhance the company's bottom line substantially. Earnings contribution and value enhancement from these affiliates shall improve, after the Taiwan Administration's recent efforts in deregulating cross-strait activities, including lifting the travel ban of Chinese tourists, allowing Chinese capital to invest in Taiwan, and initiating free trade agreements of some sorts with regulatory authorities from China. Chairman Hsu has expressed his ambition to leverage on such efforts by Taiwan Administration to increase return on FETL owners’ equity, by forming alliances, joint-ventures, or exploring other cooperative opportunities with companies based in China.
FETL owns substantial raw lands in Taiwan, with a total size of 475,000 pings. The land located in Banchiao City, a size of 76,000 pings, has been designated as Taipei Far Eastern Telelcom Park (T park). The T park project has already received the permission from the Ministry of Economic Affairs (MoEA) and Taipei County government, and has completed the land re-zoning process with the government into a specialized zone, a combination of residential area, commercial area, and a medical service center. It has also been announced by the MoEA as an important investment case of Taiwan and an important public construction case. The construction of T park has commenced and the first office building of T park is planned to be completed in 2010.
With a great pride during the shareholders’ meeting, Chairman Hsu announced it is the 60th anniversary of FETL. By persevering the company's Motto, “Sincerity, Diligence, Thrift, Prudence, and Innovation”, FETL transfers itself from a small manufacturing site into a well-developed multinational entity with substantial holdings of equity investments and estates. The company has been considering the feasibility of further evolving into an industrial holding company, provided statutory regulations can be promulgated. On the occasion of the company's 60th birthday, Chairman Hsu wished FETL to be a responsible corporate citizen for the society, a fruitful investment for the investors, and a wonderful place for the employees.
During the shareholders’ meeting, the company's 2008 business report and financial statements were accepted by shareholders. The profit allocation proposal (including a cash dividend of NT$0.8 per share and a share dividend of NT$0.2 per share, totaling NT$ 1.0 per share) and the resolution to capitalize the share dividends were approved. Proposed amendments of the Far Eastern Textile Limited Bylaws on “Procedures for Lending of Capital to Others” and “Procedures for Endorsements and Guarantees” were resolved to be approved. In addition, eleven Directors and three Supervisors were elected and appointed. The meeting also resolved to release the relevant Directors from the non-competition restriction under the Company Law as well. The meeting was concluded successfully by noon on the date of 26 June.
