Citigroup Global Markets Inc yesterday retained a "buy" rating on Fubon Financial Holding Co (富邦金控) after the nation's fourth biggest financial group by assets offered a positive outlook on Thursday.
The US equity research house maintained its target price of NT$35 for Fubon Financial, which suggested an 18 percent upside from Fubon's closing price of NT$29.65 on the Taiwan Stock Exchange yesterday.
On Thursday, Fubon Financial released its first-quarter financial results in a teleconference and said the company was looking to further upside on any progress in Chinese expansion or better returns.
Earnings in the January to March period rose 7.7 percent from a year earlier to NT$3.45 billion (US$103.7 million), or NT$0.45 per share, driven by capital gains in stock investment by its insurance and securities subsidiaries, Fubon Financial said.
valuations
"[Fubon Financial] stock's valuations remain relatively firm, pricing in a Greater China opportunity. Valuations could rerate further depending on its progress in hurdling regulatory barriers into China or in improving shareholder returns," Bradford Ti (鄭溫煌), an analyst at Citigroup Global Markets Inc, said in a report released yesterday.
In the teleconference, Fubon Financial indicated that it remained optimistic that its greater China strategy was moving forward and anticipated more concrete results in the second half of this year.
Assuming an improvement in the regulatory environment, Citigroup expected an opportunity for Fubon Financial to gain exposure to the China market's buildup via its subsidiary, Fubon Bank (Hong Kong), Ti said in the report.
Fubon Financial's banking arm has started to recover with profits rising by 10 percent quarter-on-quarter and expected annual provisioning cost returning to normal at between NT$8 billion to NT$10 billion this year, the analyst said.
Moreover, net interest margin has begun to stabilize at 1.62 percent in the first quarter from 1.6 percent in the previous quarter and wealth management that made up 73 percent of fee income from 40 percent two years ago has offset its loss of lottery business, he said.
Among Taiwanese banks, Fubon Financial has made the most aggressive inroads into Hong Kong as a first step into China after its acquisition of Fubon Bank Hong Kong.
investment risks
Yet there are some investment risks that could constrain future share prices, including implementation of its cross-selling strategy that could prove difficult, overpaying for possible acquisitions, and share overhang from divestments of strategic investors like Taipei City Government, which owns 14 percent, or sell-downs by foreign investors, Ti said.
Citigroup Global Markets Inc forecast an annual profit of NT$17.94 billion for Fubon Financial, or NT$2.32 per share this year, up from NT$8.43 billion, or NT$1.09 per share last year.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six