Investors interested in financial stocks should take a long position in Hua Nan Financial Holding Co (華南金控) on its earnings recovery prospects and should avoid Mega Financial Holding Co (兆豐金控) for its likely impaired profitability caused by Rebar Asia Pacific Group (力霸亞太集團) debts, a market watcher said.
"We prefer Hua Nan Financial... to Mega Financial," Chu Yu-chun (
SinoPac Securities gave a "buy" rating on Hua Nan with a target share price of NT$30 by the end of the current quarter, while issuing a "hold" rating on Mega Financial for the next six months.
The state-controlled Hua Nan Financial is expected to see a rebound in earnings estimated at NT$10.4 billion (US$315 million), or NT$1.74 per share, after credit and cash card bad loans provisions subside this year, Chu said.
Last year, net profits of the nation's fifth-largest financial group by assets dropped 18 percent year-on-year to NT$7.8 billion, or NT$1.31 per share, after its banking arm booked NT$9.3 billion of provisions to cover its deteriorating cash card lending assets.
The optimism is bolstered by the debt recovery coupled with the company's strength in the corporate banking sector, especially the small and medium enterprise segment where it enjoys over 9 percent of the market, making it the third largest among the 42 local banks, Chu said.
The banking-centric Hua Nan Financial also has a strong footing with overseas Taiwanese corporate clients, with a well established network created by its Hong Kong branch and its representative office in Shenzhen, China, she said.
The Hong Kong branch currently services 12,000 overseas Taiwanese customers and made an annual profit of NT$1 billion, 12.8 percent of the financial holding firm's total earnings last year, Chu added.
Also, Hua Nan chairman Lin Ming-cheng (林明成) has teamed up with other private shareholders -- Shin Kong Financial Holding Co's (新光金控) Wu family -- to safeguard their management power by acquiring a larger shareholding before the annual general meeting this year, which should also help boost the company's share price, the analyst said.
Compared with Hua Nan, Mega Financial, also state-controlled, appears a less favorable investment target with a much gloomier outlook.
Mega Financial's banking arm is the lender that is thought to have incurred the largest loss, estimated at up to NT$5 billion, due to the Rebar Asia Pacific scandal, which in turn would dent the company's profitability this year along with a shrinking investment yield, the report said.
Accordingly, SinoPac Securities revised its forecast for the company's earnings this year down to NT$14.24 billion, or NT$1.29 per share, from the previous forecast of NT$16 billion, or NT$1.45 per share.
Mega Financial's profits last year dropped to NT$17.16 billion, or NT$1.50 per share, after booking part of losses incurred owing to the defaulted Rebar Asia Pacific loans.
Hua Nan closed up 0.81 percent at NT$24.90 while Mega Financial closed down 0.22 percent at NT$22.30 on the Taiwan Stock Exchange on Wednesday.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)