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Taiwan Top 50 Corporates:
Survey – Trends & Outlook
Tony Tsai, Director
Taiwan Ratings
Sep. 8, 2005
Who Are In The Top 50
Computer hardware/
Peripheral
Electronic contract
manufacturer
Electronic distributor
Motherboard
Notebook PC
TFT-LCD
Auto
Airlines
Oil
Petrochemical
Power
Retail
Semiconductor
Shipping
Steel
Telecom
Acer, BenQ, Delta Electronics, Foxconn Technology, LITEON IT, MiTAC, Tatung
Hon Hai, Inventec Appliances, Lite-On Technology, Universal
Scientific
Synnex, World Peace
Asustek, Micro-Star
Quanta Computer, Compal Electronics, Inventec, Wistron
AUO, CMO, CPT, QDI
Hotai Motor, China Motor, Yulon Motor
China Airlines, Eva Airways
CPC, Formosa Petrochemical
Formosa Plastics, Nan Ya Plastics, Formosa Chemicals &
Fibre, Chi Mei
Taiwan Power
President Chain Store
TSMC, UMC, ASE, Powerchip, Promos
Evergreen Marine, Yang Ming Marine, Wan Hai
China Steel, Yieh United, Chunghung Steel
Chunghwa Telecom, Far EasTone Telecom, Taiwan Mobile
2
Top 50 Sector Breakdown
Shipping
6%
A uto
6%
Steel
6%
A viation
4%
Others
4%
Telecom
6%
Oil
4%
Semiconductor
10%
Petrochemical/
Plastics
8%
Electronics
46%
3
Top 50 Electronics Sector Breakdown
TFT-LCD
17%
Electronics
distributor
9%
Notebook PC
17%
Motherboard
9%
Computer
Hardw are/
Components/
Peripherals
30%
Electronic
Contract
Manuf acturer
17%
4
Taiwan Top 50 Companies
800.0
10.0
700.0
8.0
600.0
6.0
500.0
4.0
400.0
2.0
300.0
0.0
200.0
100.0
-2.0
0.0
-4.0
2000
2001
2002
2003
Net Income (NT$ bil)
5
2004
2005 (F)
GDP (%)
GDP (%)
Net Income (NT$ bil)
Top 50 Corporates' Total Net
Income & GDP Growth
Key Findings
 Taiwan top 50 reported record high aggregated profits in 2004
 Taiwan top 50 profitability trend in line with Taiwan’s GDP growth
 High-tech sector has the highest and the lowest operating margins
 Auto sector has the lowest leverage ratio，while airlines sector has
the highest leverage ratio
 Majority of Taiwan 50 companies had adequate to strong financial
ratios and good cash balances in 2004
 Old economy sector had very favorable industry conditions in 2004
 Semiconductor and TFT-LCD sectors had down cycle since 2H2004
 Electronics sector still faces pricing and margin pressure
6
Earnings cycle had peaked, slowdown in 2005
 Taiwan top 50 aggregated earnings expected to decline 29% in 2005
 Slowing economic growth in the globe and in Taiwan
 High oil price impact and cool down measures in China
 Old economy sector faces less favorable pricing environment in 2005
 TFT-LCD and semiconductor sectors will report biggest profit declines
 But leading players among top 50 will maintain sound financial ratios
 Clear divergence of operating performance because of size
 Stalemate of cross straits relations constrains long-term growth and
could undermine long-term competitiveness
 Investors and bankers should watch out for weak players in the hightech sector
7
Taiwan Top 50 Companies
Median Pretax Interest
Coverage (x)
20.0
25.0
20.0
15.0
15.0
10.0
10.0
5.0
5.0
0.0
0.0
2000
2001
2002
Median pretax interest coverage (x)
8
2003
2004
Median EBITDA interest coverage (x)
Median EBITDA interest
coverage (x)
Pretax and EBITDA Interest Coverage
Taiwan Top 50 Companies
Median FFO/ Total debt
(%)
60.0
55.9
50.0
40.0
44.3
46.4
2002
2003
49.4
29.9
30.0
20.0
10.0
0.0
2000
2001
9
2004
Taiwan Top 50 Companies
16.0
16.0
14.0
14.0
12.0
12.0
10.0
10.0
8.0
8.0
6.0
6.0
4.0
4.0
2.0
2.0
0.0
0.0
2000
2001
2002
Median ROPC (%)
2003
2004
Median Operating margin (%)
10
Median operating margin (%)
Median ROPC (%)
ROPC and Operating Margin
Taiwan Top 50 Companies
Median Total debt/capital
(%)
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
36.2
29.9
28.8
2000
2001
2002
11
32.0
30.0
2003
2004
Operating Margin Comparison
19.2
Median operating margin (%)
20
17.1
16.6
15.6
15
12.5
10
7.9
7.6
6.2
5.3
5.2
5
0
2000
2001
2002
Electronics companies
12
2003
Non-electronics companies
2004
EBITDA Interest Coverage
Comparison
Median EBITDA Interest Coverage (x)
25
23.7
21.4
20.9
20
16.8
15
10
13.6
8
8.8
8.2
7.6
4.8
5
0
2000
2001
2002
Electronics companies
13
2003
Non-electronics companies
2004
FFO/Total Debt Comparison
Median FFO/Debit (%)
100
80
60.8
60
59.8
54.8
64.7
51.5
50.3
44.6
41.2
40
32.5
26.5
20
2000
2001
2002
Electronics companies
14
2003
Non-electronics companies
2004
Total Debt/Capital Comparison
Median Debt/Captial (%)
50
40
36.2
32
31.9
30
30.1 30.0
29.9
28.4 28.8
24.8
24.2
20
10
2000
2001
2002
Electronics companies
15
2003
Non-electronics companies
2004
Operating Margin Comparison-Electronics
Sector
Median Operating Margin (%)
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2000
2001
2002
2003
2004
Computer Hardware/Components/Peripherals
Electronic Contract Manufacturer
Motherboard
Notebook PC
TFT-LCD
16
Debt to Capital Comparison-Electronics
Sector
55.0
Median Debt/Capital (%)
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2000
2001
Computer Hardware/Components/Peripherals
2002
2003
Electronic Contract Manufacturer
17
2004
Motherboard
Notebook PC
TFT-LCD
Who Has The Highest Interest Coverage?
The highest EBITDA interest coverage in 2004
>1,000
Chunghwa Telecom Co. Ltd.
851.5
Asustek Computer Inc.
296.3
Yulon Motor Co. Ltd.
123.4
LITE-ON IT Corp.
87.6
Taiwan Semiconductor Manufacturing Co.
74.9
Powerchip Semiconductor Corporation
68.2
Foxconn Technology Co.
61.2
Hon Hai Precision Industry Co.
60.9
China Steel Corporation
59.1
Delta Electronics Inc.
50 150 250 350 450 550 650 750 850 950
(x)
18
Who Has The Lowest Interest Coverage?
The lowest EBITDA interest coverage in 2004
1.4
Tatung Co.
China
Airlines ,Ltd.
5.0
World Peace
Industrial Co.
5.4
Eva Airways
Corp.
5.4
Taiwan Power
Company
8.2
0
2
4
19
6
8
(x)
10
Who Has The Highest Operating Margin?
The highest operating margin in 2004
Taiwan Semiconductor Manuf. Co. Ltd.
61.5
Powerchip Semiconductor Corp.
61.3
Chunghwa Telecom Co.
55.2
United Microelectronics Corp.
53.4
51.6
Promos Technologies Inc.
48.2
Taiwan Mobile Co.
46.9
Far EasTone Telecom. Co. Ltd.
39.1
China Steel Corporation
32.1
AU Optronics Corporation
30.4
Chi Mei Optoelectronics Corp.
(%)
0
20
10
20
30
40
50
60
70
Who Has The Lowest Operating Margin?
The lowest operating margin in 2004
Tatung Co.
0.7
Inventec Corporation
1.9
Wistron Corporation
1.9
Synnex Technology International
Corporation
2.2
World Peace Industrial Co.
2.5
Acer Inc.
2.5
2.6
Micro-Star International Co.
2.7
Hotai Motor Co.
3.7
BenQ Corp.
3.8
Inventec Appliances Corporation
0.0
1.0
21
2.0
3.0
4.0
(%)
Who Has The Largest Cash Balances?
The largest cash on hand in 2004
128
Taiwan Semiconductor Manuf. Co. Ltd.
105
United Microelectronics Corp.
65
China Steel Corporation
50
Quanta Computer Inc.
47
Hon Hai Precision Industry Co.
44
Chunghwa Picture Tubes,Ltd
43
Quanta Display Inc.
38
Chunghwa Telecom Co.
Powerchip Semiconductor Corporation
36
Lite-On Technology Corporation
36
(NT$ bil.)
10
22
30
50
70
90
110
130
Who Had The Largest Total Debt In 2004?
568
Taiwan Power Company
151
Formosa Petrochemical Corp.
141
China Airlines ,Ltd.
116
Nan Ya Plastics Corporation
Chi Mei Optoelectronics Corp.
74
United Microelectronics Corp.
73
Formosa Plastics Corporation
67
Chunghwa Picture Tubes,Ltd
64
AU Optronics Corporation
60
Formosa Chemicals & Fibre Corporation
59
(NT$ bil.)
50
23
150
250
350
450
550
Who Had The Largest FFO in 2004?
160
Taiwan Semiconductor Manuf. Co. Ltd.
92
Chunghwa Telecom Co.
80
Taiwan Power Company
68
United Microelectronics Corp.
66
Formosa Petrochemical Corp.
62
China Steel Corporation
54
AU Optronics Corporation
Hon Hai Precision Industry Co.
40
Formosa Chemicals & Fibre Corporation
40
Chinese Petroleum Corp.
39
(NT$ bil.)
10
24
60
110
160
Who Has The Lowest FFO/Total Debt?
The lowest FFO/total debt in 2004
-1.1
Tatung Co.
China
Airlines ,Ltd.
7.5
World Peace
Industrial Co.
10.4
Taiwan Power
Company
14.0
Eva Airways
Corp.
14.8
(%)
2
0
2
4
6
25
8
10
12
14
16
Who Has The Highest Leverage?
The highest total debt/ total capital in 2004
72.8
Chi na Ai rl i nes ,Ltd.
62.3
Worl d Peace Industri al Co.
54.8
Eva Ai rways Corp.
T ai wan Power Company
52.6
Yi eh Uni ted Steel Corporati on
51.9
Wan Hai Li nes Ltd.
51.5
Eva Ai rways Corp.
51.4
Advanced Semi conductor Engi neeri ng Inc.
51.0
48.8
Chung Hung Steel Corporati on
46.6
Quanta Di spl ay Inc.
0
10
26
20
30
40
50
60
70
(%)
80
Who Are The Most Profitable?
The most profitable in 2004
Taiwan Semiconductor Manuf. Co. Ltd.
92.3
China Steel Corp.
51.6
Formosa Petrochemical Corp.
50.3
Chunghwa Telecom Co.
49.9
Nan Ya Plastics Corporation
43.5
Formosa Chemicals & Fibre Corporation
41.3
Formosa Plastics Corporation
36.4
United Microelectronics Corp.
31.8
Hon Hai Precision Industry Co.
29.8
AU Optronics Corporation
28.0
(NT$ bil.)
0
10
27
20
30
40
50
60
70
80
90 100
Who Are The Most Profitable?
The most profitable in 1H2005
Taiwan Semiconductor Manuf. Co. Ltd.
35.2
China Steel Corp.
32.8
Formosa Petrochemical Corp.
30.8
Chunghwa Telecom Co.
24.3
Formosa Chemicals & Fibre Corporation
23.5
Nanya Plastics Corporation
20.6
Formosa Plastics Corporation
17.3
Hon Hai Precision Industry Co.
16.3
Chinese Petroleum Corp.
13.0
Asustek Computer Inc.
8.5
(NT$ bil.)
0
5
28
10
15
20
25
30
35
40
Who Are The Least Profitable?
The least profitable in 1H2005
Advanced Sem iconductor Engineering
-9.2
Quanta Dis play Inc.
-8.4
Chunghwa Picture Tubes ,Ltd
-7.4
-3.7
Tatung Co.
-3.7
Chi Mei Optoelectronics Corp.
-1.7
Taiwan Power Com pany
-1.7
AU Optronics Corporation
-1.2
Prom os Technologies Inc.
World Peace Indus trial Co.
0.1
Univers al Scientific Indus trial Co.
0.1
(NT$ bil.)
10.0
8.0
6.0
4.0
29
2.0
0.0
Standard & Poor’s Ratings Matrix
Financial Profile
Business Profile Minimal
Modest
Intermediate Aggressive Highly leveraged
Excellent
AAA
AA
A
BBB
BB
Strong
AA
AA
A-
BBB-
BB-
Satisfactory
A
BBB+
BBB
BB+
B+
Weak
BBB
BBB-
BB+
BB-
B-
Vulnerable
BB
B+
B+
B
B-
30
Taiwan Ratings Corporate Ratings List
Issuer
Taiwan Ratings Corp.
Standard & Poor's
Rating
Outlook
Rating
Outlook
Chunghwa Telecom Co. Ltd.
twAAA
Stable
AA-
Negative
Taiwan Semiconductor Manufacturing Corp.
twAAA
Stable
China Steel Corp.
twAAA
Stable
Chinese Petroleum Corp.
twAAA
Stable
A+
Stable
Taiwan Power Co.
twAAA
Stable
A+
Negative
Taiwan Cellular Corp.
twAA
Stable
Far EasTone Telecommunication Co. Ltd.
twAA
Stable
BBB+
Stable
Hon Hai Precision Industry Co. Ltd.
twAA
Stable
BBB+
Stable
United Microelectronics Corp.
twAA
Stable
BBB+
Stable
Mai-Liao Power Corp.
twAA-
Stable
Formosa Chemicals & Fibre Corp.
twAA-
Stable
BBB+
Stable
Formosa Petrochemical Corp.
twAA-
Stable
BBB+
Stable
Formosa Plastics Corp.
twAA-
Stable
BBB+
Stable
31
Taiwan Ratings Corporate Ratings List
Issuer
Taiwan Ratings Corp.
Standard & Poor's
Rating
Outlook
Rating
Outlook
Nan Ya Plastics Corp.
twAA-
Stable
BBB+
Stable
Wan Hai Lines Ltd.
twA+
Stable
BBB
Stable
Ho-Ping Power Co.
twA+
Stable
Compal Electronics Inc.
twA+
Stable
BBB-
Stable
Nan Ya Printed Circuit Board Corp.
twA+
Stable
Taiwan Sugar Corp.
twA+
Stable
Chi Mei Corp.
twA
Stable
Yangming Marine Transport Corp.
twA
Stable
Taiwan Acceptance Corp.
twA
Stable
Yulon Motor Co. Ltd.
twA
Stable
Asia Cement Corp.
twA
Stable
Yuan Ding Investment Corp.
twA
Stable
BenQ Corp.
twA
Negative
32
Taiwan Ratings Corporate Ratings List
Issuer
Taiwan Ratings Corp.
Unimicron Technology Corp.
twA-
Positive
Cathay Real Estate Development Co., Ltd.
twA-
Stable
Nanya Technology Corp.
twA-
Stable
Fortune Motors Co. Ltd.
twA-
Stable
Carplus Auto Leasing Corp.
twA-
Stable
Shinshin Credit Corporation
twBBB+
Stable
Long Bon Development Co., Ltd.
twBBB+
Stable
China Airlines
twBBB
Stable
Advance Data Technology Corporation
twBBB-
Stable
Yageo Corp.
twBB+
Stable
Standard & Poor's
Ritek Corp.
B+
Stable
Macronix International Co., Ltd.
B
Negative
33