Amid the outbreak of a chain of financial scandals that had cast a shadow over the local bourse, a Taipei-based credit assessing firm yesterday listed 23 industries with weak financial conditions that investors need to know about.
The five industries categorized as needing the most vigilance included wool textiles, construction and land development, metalworking, hotels and ceramics manufacturing, according to a survey by the China Credit Information Service Ltd (
The wool textile industry yielded six worrying cases, including Chuwa Wool Industry Co (中和羊毛), while construction and land development had 66 cases, like Huaku Construction Co (華固建設), said Liu Jen (劉任), editor-in-chief at China Credit.
As many as 29 companies were listed in the metalworking industry, such as Taichung Machinery Works Co (台中精機), whereas 17 hotels, including Formosa International Hotels Corp (晶華酒店) and 11 ceramics companies, including bathroom-equipment maker Hocheng Corp (和成), were also surveyed, Liu said.
The survey was conducted based on last year's financial books of 2,604 listed and non-listed companies that were divided into 182 industries.
The assessment used 14 indices, including capital utilization, mobility of assets and debts, capability for growth, profitability, liquidation ability for short-term debts, inventory and account receivables.
"The economic rebounds help only a few star industries' performances but not the financial health of all the industries," the company said in a statement, adding that the performances of up to eight indices, such as net income ratio and turnover rate of account receivables, had deteriorated this year compared with last year.
The listed companies that were said to have problematic finances were also found to have less-than-ideal assessment results, China Credit said.
A series of scandals on the local bourse forced the nation's financial regulators to enhance its substantial examination of semi-annual financial reports of up to 170 publicly listed companies this year, in a bid to include as many potentially problematic companies as possible.
Companies that had poorer-than-expected performances, such as Elitegroup Computer Systems Co (
Information technology and electronics industry players like personal-computer makers and wired communications equipment makers did not perform well in account receivables, China Credit said.
"Companies that have overly high unpaid accounts deserve investors' scrutiny," the company said.
Game software, integrated circuit design, semiconductors, wireless communication equipment and the data storage manufacturing sectors were rated as the industries with the best performance, in light of their strong capability for growth and liquidation of short-term debts, high mobility, profitability and low inventory level, according to the survey.
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