| Prime News | | ![]() | ![]() | Taiwan Overtaken by South Korea in WEF Global Competitiveness Assessment
Taipei, Nov. 1, 2007 (CENS)--Due to its serious degradation in the index of banking soundness, Taiwan's ranking in the global competitiveness assessment for 2007 by the World Economic Forum (WEF), a Geneva-based think tank, slipped one notch from 2006 to 14th place, overtaken for the first time by South Korea, whose ranking jumped 12 notches to 11th place.
Taiwan suffers decline in such ranking for the second year in a row, resulting in drop of six notches from 2005's eighth place, with its 2007 ranking being the lowest among the four Asian little dragons, trailing Singapore's seventh place and Hong Kong's 12th place. Taiwan's performance is also paled by the showing of China, whose ranking advanced another notch to 34th place, the highest among the four BRIC nations, following jump of 13 notches in 2006.
WEF's 2007 global competitiveness report covers 131 nations, whose outcome is based on 113 indices in 12 categories, including institution, infrastructure, macroeconomic stability, health and primary education, higher education and training, good market efficiency, labor market efficiency, financial market sophistication, technological sophistication, market size, business sophistication, and innovation.
Main culprit for the slip of Taiwan's global competitiveness ranking for 2007 is plunge in the ranking for banking soundness index to 114th place, from 2006's 100th place, even lower the rankings of many developing nations. Taiwan also has a poor showing for the indices for capital movement freedom and adequacy for securities trading law and regulations, ranking 80th place and 61st place, respectively. As a result, Taiwan's ranking in the category of financial market sophistication slipped 11th notches to 58th place.
Ho Mei-yueh, chairperson of the Council for Economic Planning and Development (CEPD), attributed the poor showing for the banking soundness index to eruption of the Rebar Group scandal and the run on its subsidiary Chinese Bank earlier this year, which affected the evaluation by regional business leaders, with their response to WEF questionnaires carrying 70% weighting in the outcome of its assessment. Domestic political turbulence and negative media report also produced a bad impression on the respondents, according to the CEPD.
Taiwan's ranking for the labor market efficiency category drops six notches to 22nd place, due mainly to high severance costs, rigid employment, and low female labor participation rate. In addition, Taiwan's ranking for innovation slides to 10th place, from past ranking which was among tops. Taiwan only scores advance in rankings for the three categories of infrastructure, health and primary education, and higher education and training.
Ho Mei-yueh attributed South Korea's remarkable performance in the global competitiveness assessment to its signing of Free Trade Agreement with the U.S. and peace agreement with North Korea.
The United States tops the global competitiveness assessment, with Switzerland standing at the second place, followed by Denmark, Sweden, Germany, Finland, and Singapore.
((PL)) (GE) | |
| | ![]() | | | Draft New Law Allows Setup of Financing Firms
Taipei, Nov. 1, 2007 (CENS)--The Executive Yuan (the Cabinet) passed the draft "Financing Company Law" yesterday (Oct. 31) opening up establishment of non-deposit taking financing firms, as part of a package aimed to augment the nation's financial-market competitiveness.
The package contains five components of draft new or revised financial laws, which has been included in the list of priority bills for passage by the Legislative Yuan during its current session, according to Chen Mei-lin deputy secretary general of the Executive Yuan.
Chung Hui-chen, deputy director general of the Banking Bureau, the Financial Supervisory Commission (FSC), remarked that the new law will legalize operations of existing underground money lenders, in addition to attracting foreign financing companies to invest in Taiwan.
Existing related financial companies will be able to apply for conversion into financing firms, including those engaged in financing-oriented leasing, trading in installment-payment business, and factoring of accounts receivable and money obligations.
The FSC, which will oversees operations of financing firms, expressed that minimum paid-in capital for financing firms will be set NT$5 billion-10 billion initially.
Another bill included in the package is revised Income Tax Law, which sets a uniform 10% tax on individual incomes from purchase of repo (repurchase agreement) financial instruments, short-term commercial papers (down from 20% now), and securities beneficial certificates (up from 6% now), giving them a fair footing.
Meanwhile, the revised "Law for Financial Holding Firms" lifts the ban on re-investments by subsidiary banks of financial holding firms and includes investments in non-financial businesses by subsidiaries to the aggregate amount of the financial holdings firms for such investments, which cannot exceed 15% of the total shares of the invested companies.
The revised banking law requires banks with capital adequacy rate or book value/assets ratio dropping below 2% to exit the market should they fail to improve the situation by a deadline.
((PL)) (GE) | |
| | ![]() | | | E United Invests US$1 B. to Build a Company Town in Vietnam
Taipei, Nov. 1, 2007 (CENS)--In the wake of the groundbreaking for the construction of Kuanlian steel plant in Vietnam by cooperating with Tycoons Group Enterprise Co., E United Group has resolved to invest US$1 billion to build a company town, including a hospital, university, and golf course.
E Untied said it would duplicate its successful experience in Kuanyinshan of Kaohsiung County, southern Taiwan to build the new town in Vietnam.
The recently held groundbreaking ceremony for Kuanlian plant was co-hosted by E United Group chairman I.S. Lin and Tycoons Group chairman Huang Wen-song, which attracted a hundred participants from the iron and steel sector across the Taiwan Strait. The proposed Kuanlian plant is expected to become the largest iron and steel production base in the Chinese community worldwide.
Y.C. Chiang, chairman of China Steel Chemical Co. and former chairman of CSC, said Kuanlian plant is equipped with a blast furnace and his company would have great opportunities to cooperate with the proposed plant.
Occupying 450 hectares, the Kuanlian plant will become Vietnam's first blast-furnace steel plant and the largest steelmill in Southeast Asia.
If the Vietnamese government supports the plan, E United and Tycoons will build up the Kuanlian plant in four stages with total investment of US$5 billion. The Vietnamese government has promised to help E United finalize the massive investment project.
Kuanlian Iron & Steel Co. chairman F.H. Chen said his company would set up a 4,000-cubic-meter blast furnace in the Kuanlian plant. The huge blast furnace will be the largest of its kind globally, with the plant to boast the world's most advanced production equipment.
The company said it would invest US$1.65 billion to complete the first-stage of the Kuanlian plant to have a designed capacity of three million metric tons of raw steel. The first construction stage will be completed in three years. After the first-stage construction is complete, the company will launch the second-stage construction, which will have an annual production capacity of 2.5 million metric tons of steel products, including raw steel and hot-rolled steel coils.
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| | ![]() | | | Moody's Affirms Bank SinoPac's Bank Financial Strength Rating of D+
Taipei, Nov. 1, 2007 (CENS)--Moody's Investors Service, Inc. has recently affirmed Bank SinoPac's bank financial strength rating (BSFR) of D+ and foreign currency deposit ratings of Baa1/P-2. At the same time, Moody's has affirmed SinoPac Holdings' ratings of Baa2. The outlook on all ratings is stable.
This action follows Bank SinoPac's announcement that it would register a US$43 million loss in the third quarter of this year due to losses on its US$350 million exposure to structured investment vehicles (SIVs).
"While the full impact of any potential write-down on losses from its SIV exposure is expected to be manageable—relative to the bank's sound credit fundamentals—Bank SinoPac's development of a concentration of these and other structured products points to lapses in risk governance and management," said Richard Lung, a Moody's vice president/senior analyst.
"In effect, its acquisition of such a large portfolio of highly leveraged and short-funded SIV instruments—totaling almost 20% of its Tier-1 capital—highlights a strategy of aggressive risk-positioning to meet profit growth targets," said Lung.
"Moreover, Moody's affirmation is based on the assumption that Bank SinoPac could experience further liquidation losses on its SIV exposure," Lung noted.
However, even in the most severe stress scenario where the bank is forced to recognize a full loss on this exposure, it should still be able to withstand such a shock—in isolation—given its ample liquidity, strong capital levels, and relatively sound asset quality.
At the same time, the losses could weigh on its credit fundamentals to a point where additional stresses could lead to a reassessment of its financial strength. Moody's noted that the bank's expansion of its investment strategy to include such highly leveraged instruments should have been accompanied by a more comprehensive and robust review of their attendant risks.
Going forward, Moody's will focus on the steps that Bank SinoPac's board of directors and senior management take to improve the bank's risk management framework.
Moody's noted the failure to implement a more robust framework could place downward pressure on the bank's ratings due to concerns that future similar losses could recur in the absence of such improvements.
Established in 1992, Bank SinoPac is among the 16 new private banks permitted after deregulation of the Taiwan banking sector. With emphasis on retail banking, the bank aims to become a full service bank operating throughout the Pacific Rim. In May 2002, it formally merged into SinoPac Holdings. SinoPac Holdings reported consolidated assets of NT$1.12 trillion (US$34.5 billion) at the end of last year.
((BS)) (GE) | |
| | ![]() | | | AUO Announces Lucrative Q3 Results
Taipei, Nov. 1, 2007 (CENS)--AU Optronics Corp. (AUO), the largest thin film transistor-liquid crystal display (TFT-LCD) panel manufacturer in Taiwan, recently announced its operating results for the third quarter of 2007, including consolidated net income of NT$22.57 billion (US$691 million at US$1: NT$32.67) and earnings per share (EPS) of NT$2.89 (US$0.88 per ADR unit).
For the third quarter ended on September 30, AUO's consolidated revenue totaled NT$137.96 billion (US$4.2 billion), up 30.1% from previous quarter.
For the first three quarters, AUO's registered consolidated revenue of NT$324 billion (US$9.9 billion), consolidated after-tax net income of NT$23.38 billion (US$0.7 billion), translating into EPS of NT$3 (US$0.9).
AUO shipped 22.26 million large-sized panels in the third quarter, an increase of 14.3% from previous quarter; while shipments of small- and medium-sized panel amounted to 40.70 million units with a 26.3% quarterly increase. Both once again set record quarterly highs.
Max Cheng, vice president and chief financial officer (CFO) of AUO, said that his company is very pleased with the record operating results. The third-quarter consolidated after-tax net income was 1.5-times that of the previous record high of NT$14.3 billion (US$437.84 million) in the second quarter of 2004.
In addition to the strong demand from end-user markets and gradually rising panel average selling prices (ASP), Cheng said, AUO's acquisition of Quanda Display Inc. (QDI) has generated positive and mixed effects to upgrade AUO's operating margin to 23% in the third quarter from 11.4% in the second quarter, while the net margin to 18.7% from 6.5%.
After over one year of post-acquisition integration efforts, AUO said, such as R&D platform integration, supply-chain management practice, production-line efficiency upgrading (at different-generation panel plants), and product mixture adjustment, etc., the company successfully reduced the third-quarter inventory turnover to 38 days from 43 days in previous quarter.
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| | ![]() | | | CPT Introduces Innovative Technologies for Small, Medium TFT-LCD at FPD International 2007
Taipei, Nov. 1, 2007 (CENS)--At the just-ended FPD FPD International 2007 held in Yokohama, Japan, Chunghwa Picture Tubes, Ltd. (CPT), the No. 3 large-sized thin film transistor-liquid crystal display (TFT-LCD) panel maker in Taiwan, displayed a series of innovative technologies for small- and mid-sized panels ranging from 2.4- to 10.2-inch.
In addition, the company also showcased its 3.5-inch twisted nematic (TN) and vertical alignment (VA) trans-reflective (TR) TFT-LCD and 7-inch dual-screen technology for car navigation.
According to CPT, TR TFT-LCD has been the most competitive technology applied in small- and mid-sized panels, which has the advantages of high color saturation, high contrast and low power consumption. The company's 3.5-inch TN TR panels with high reflectivity gives the display excellent legibility under sunlight, and it also features excellent viewing angles—at 100 degrees horizontally and 50 degrees vertically.
Additionally, 3.5-inch VA-type TR panel has excellent optical performance, CPT said, including over-4% reflectivity at panel center and over-176-degree viewing angles both horizontally and vertically. Meanwhile, both of them save about 30% backlight power consumption with CPT's Adaptive Backlight Control (ABC) technology.
In addition, CPT-developed 7-inch dual-screen technology for car navigation can simultaneously play navigation system and audio entertainment to the driver and passengers.
At the show, CPT also planned a special zone, the "Clear Motion", to show CPT's motion-blur-reduction technology. CPT has developed 120Hz 37-inch LCD TV panels with motion estimating motion compensation (MEMC) technology. The new technique, according to the Taiwan panel maker, has obviously reduced the motion blur of LCD panel, so the motion picture quality of LCD TV is almost as good as that of cathode-ray tube (CRT).
The Edge Detect Motion Over Drive (EDMOD) is another unique motion image enhancement technique developed by CPT to solve the imperfection of conventional Over Drive (OD) and reach MEMC-like effects. As a result, CPT said, the EDMOD function provides a better solution to reduce the motion blur on large-size LCD TV at more reasonable cost.
((QL)) (E) | |
| | ![]() | | | Taiwan Sees Shrinking Card Market in September
Taipei, Nov. 1, 2007 (CENS)--Still aching in the aftermath of the twin-card storm, Taiwan's credit card market is still weak this year. In September the number of credit cards issued in Taiwan declined 2.97 million from a year earlier to 36.5 million and the outstanding revolving credit edged down NT$84.1 million (US$2.55 million at US$1 = NT$33) to NT$295 billion (US$8.94 billion).
Nevertheless, the amount of credit card spending posted a slight annual rise of 4.27% or NT$4.5 billion (US$136.36 million) to NT$110 billion (US$3.33 billion).
In the same month, the number of cash cards in use tumbled by 670,000 to 1.71 million and the outstanding cash card loans reduced by 32.23% to NT$136.5 billion (US$4.14 billion).
So far this year the banks in Taiwan have written off a total of NT$49.5 billion (US$1.5 billion) in delinquent credit card loans, with Chinatrust Commercial Bank erasing NT$5.5 billion (US$166.67 million), the highest among the banks. Taipei Fubon Commercial Bank, Cathay United Bank and Union Bank of Taiwan each has erased more than NT$3 billion (US$90.91 million) in the same period.
As for bad cash card loans, the banks here erased a total of NT$29.8 billion (US$903.03 million) and, of which, Taishin International Bank took the largest share of NT$9.9 billion (US$300 million).
As a result, the average delinquent credit-card loan ratio of the banks on the island edged down by 0.01 of a percentage point from a month earlier to 2.11% in September and the delinquent cash-card loan ratio down by 0.29 of a percentage point to 6.78%.
Among the banks, the Chinese Bank posted the highest delinquent credit-card loan ratio of 11.92%, followed Bowa Bank's 5.48% and EnTie Commercial Bank's 4.4%. ABN AMRO Bank, a Dutch bank, recorded the highest delinquent cash-card loan ratio of 35.07% due mainly to its merger with ill-operated Taitung Business Bank, a local bank. Bowa recorded the second highest such ratio of 20.45%, and The Chinese Bank, Taishin, and Cosmos Bank saw the corresponding ratios stand at 14.23%, 9.72%, and 5.05%, respectively.
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| | ![]() | | | Taiwan's Foreign-currency Deposits Keep Rising in September
Taipei, Nov. 1, 2007 (CENS)--Taiwan's outstanding foreign-currency deposits stood at NT$2.0227 trillion (US$61.29 billion at US$1 = NT$33) at the end of September of this year, the second highest of its kind; if discounting the appreciation of local currency, such deposits would reach US$62.084 billion, the highest of its kind ever recorded, according to the statistics released by the central bank here.
In June of the year, the central bank announced to sharply raise the reserve ratio of foreign-currency deposits to 5% from the originally 0.125%, hoping to help boost local-currency deposits and slow down the outflow of capital.
Insiders indicated that in July the bullish local bourse absorbed obviously increasing investments from investors and many of them were believed to have transferred their deposits in foreign currencies into local currency so to funnel the capital into the stock market. As a result, the banks here experienced growing local-currency deposits during the month.
However, in August the U.S. sub-prime mortgage storm started to spill over globally and hit many financial markets around the world. Seeing this, some investors in Taiwan rapidly withdrew from the local bourse and diverted their capital in the stock market into banking system, mainly in foreign-currency deposits to gain better returns. Such capital flow continued in September and was further reinforced by growing outbound investment.
Some banking officials said that Taiwan's worsening investment environment has also moved domestic investors to engage in more overseas investments, with investors on the island prefer holding foreign currencies instead of the local one.
((JL)) (GE) | |
| | ![]() | | | Winbond Focuses on Production of Flash Memory
Taipei, Nov. 1, 2007 (CENS)--To counter a recession in the market for dynamic random access memory (DRAM), the Taiwan-based Winbond Electronics Corp., a supplier of memory products, has taken a deliberate move to expand capacity in its 12-inch wafer manufacturing plant, in an effort to boost sales of flash memory, according to company sources.
Winbond has driven up its shipment of serial flash memory by 4-6 folds this year, effectively commanding a 12.5% share in the market for the products and enjoying a gross profit rate of 15%. As the sector is expected to further grow by about 60% in production next year, Winbond, with sales of serial flash memory to contribute 13% to its annual revenue, hence aims for a 20% market share and a 20% gross profit rate this year.
Winbond plans to invest NT$19 billion next year partly on converting existing 90-nanometer production process into the 75- and 58-nanometer and partly on upgrading its technology of making flash memory. In the meantime, the firm will boost capacity by 20% to 30% to achieve double-digit growth in its gross profit rate of premium DRAM.
Winbond will completely spin off its logic business division into a new subsidiary in mid-2008. Accordingly, the division now generates 33% of Winbond's sales, with a gross profit rate of between 35% and 40%. To sharpen its edge, the new subsidiary, which will specialize in production of peripheral components for personal computers and consumer integrated circuits (IC), will take over Winbond's 6-inch wafer production plant.
Having suffered plummeting prices in DRAM for two consecutive quarters this year, Winbond has been steadily focusing on 80-nanometer and below process in the third quarter. Also, thanks to a 40% gross profits generated from its logic products, the firm smoothly pushed up its gross profit rate to 7% from 3% in the third quarter, and posted a single-quarter loss of NT$650 million. In total, the firm has lost NT$1.67 billion in sales, or NT$0.45 per share, over the first three quarters of the year.
In the fourth quarter, Winbond projects shipment in the market for memory used in mobile devices to grow by 8%, with such items mainly exported to the Middle East, Africa and Europe, while shipment for PCs is to increase by 11%.
Wilson Wen, vice president of Winbond, noted that with a conservative outlook on the DRAM market in the fourth quarter, the firm expects the proportion of products made with its 80-nanomter process to move up to 25% from 17% in the quarter to improve its production costs.
At the moment, the firm's first 12-inch wafer manufacturing plant has attained monthly capacity of 28,000 units, and its second plant will start producing in mid-2008 to reach capacity of 10,000 units per month. The two plants are estimated to generate a total of between 35,000 and 38,000 wafers per month as of the end of next year.
Coincidentally, with overwhelming orders, Winbond's 6-inch wafer plant has been running at full capacity of 55,000 units per month, which still cannot keep up to demand.
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| | ![]() | | | Everlight Still Most Profitable in Taiwan's LED Sector in Q3
Taipei, Nov. 1, 2007 (CENS)--Everlight Electronics Co., Ltd., one of Taiwan's large downstream packagers of light-emitting diodes (LEDs), reported banner net profits of NT$614 million, up 54%, for the third quarter of this year, and scored the highest net profits of NT$4.32 per share for the first three quarters, leading the sector on the island, according to company sources.
In the meantime, Ligitek Electronics Co., Ltd. reposted single-quarter profits equaling its half-year profits for the third quarter, while Formosa Epitaxy Incorporation (FOREPI), thanks to exploding shipments, saw its gross profit rate rise by nine percentage points, with net profits of NT$74.66 million, growing by 1.2 folds from the second quarter.
Among Taiwan's LED makers with robust profits, Everlight unsurprisingly still led the sector with the highest profits after reporting its sales performance for the third quarter. The company saw its gross profit rate move up to 31.55% in the quarter, scoring better-than-expected pretax profits of NT$732 million and net profits of NT$614 million, up 54% from a quarter earlier.
Over the past three quarters, Everlight has posted a gross profit rate of 29.73%, pretax profits of about NT$1.7 billion and net profits of NT$1.438 billion, or NT$4.32 per share. Institutional investors project the company's full-year net profits to reach NT$6.5 per share at least in the year.
However, FOREPI posted the strongest growth in profits for the third quarter among Taiwan's LED makers. The company has turned around its negative profitability over the past five quarters in a row, raking in net profits of NT$74.59 million in the quarter, sharply growing by 1.22 folds from a quarter earlier.
FOREPI noted that such an explosive growth in profits is attributable to its expanded capacity and adjusted product lines, which helped it to raise the gross profit rate to 30% in the third quarter from 21% posted a quarter earlier. Hopefully, the company will further raise such rate in the fourth quarter, when it will keep expanding production capacity.
Incidentally, Ligitek reported net profits of NT$24.28 million for the third quarter, up 19.7% from a quarter earlier and equaling to the half-year profits posted in the first half. The company has scored pretax profits of NT$61.78 million and net profits of NT$50.15 million, or NT$0.66 per share, over the first three quarters of the year.
Ligitek is most likely to report the strongest growth in profits in the fourth quarter, as its reinvested company, which is dedicated to production of solar cells, is already operational, and its subsidiary in China is venturing into making memory modules. Ligitek predicts its single-month combined revenue to exceed NT$200 million and earnings per share to stand at NT$1 in the fourth quarter.
((SC)) (E)
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