Shares of Mega Financial Holding Co (兆豐金控), the nation's third-largest financial group by assets, remained intact, despite looming selling pressure as Chinatrust Financial Holding Co (中信金控) was ordered to dispose of Mega Financial shares.
Mega Financial closed unchanged at NT$20.90 yesterday, after the financial regulator had reportedly ordered Chinatrust Financial to sell its holding in Mega Financial after the former's failed initial takeover bid for the latter.
Financial institutions are only permitted to hold stakes in rivals for the purpose of takeover bids. Chinatrust Financial currently holds a 15.6 percent stake in Mega Financial.
Shares of Chinatrust Financial closed down 0.75 percent at NT$26.50 on the Taiwan Stock Exchange yesterday.
Not expecting much immediate impact, Citigroup Global Markets retained its target price of NT$22.50 for Mega Financial.
On Thursday, Citigroup cut its target price for Mega Financial to NT$22.5 from NT$25.
"This time it is different," Bradford Ti (鄭溫煌), an analyst who tracks the nation's financial sector at the US brokerage, said in his research note released yesterday.
"Since Chinatrust acquired this stake legally, we doubt the FSC [Financial Supervisory Commission] will apply the same pressure it did when it was forced to sell the initial 3.9 percent acquired via a Hong Kong holding company," Ti said.
Even if Chinatrust is required to comply with the FSC's request, it is expected to be given much more flexibility in the timing and mode of the disposal, he added.
The regulator required Chinatrust Financial to to sell part of its 15.6 percent holding in Mega Financial by July 20, after the company was found misusing funds and conducting unlawful transactions during the process of its takeover investment in the larger rival.
The commission would ask Chinatrust Financial to elaborate at an appropriate time upon its planned handling of the remaining shareholding, FSC Spokesperson Susan Chang (張秀蓮) told reporters on Thursday.
"We would require the company to offload the rest of its stake [11.7 percent] in Mega Financial if it does not plan to proceed with its takeover investment, as financial holding firms are not allowed to make financial investments," Chang said.
Chinatrust Financial spokesman Jason Wang (
Yet, potential losses resulting from a sell-down of its Mega investment will remain a burden on earnings and stock valuations for Chinatrust Financial, Ti said.
The analyst estimates every NT$1 decline in the Mega share price versus its cost of NT$24 to NT$25 per share would bring Chinatrust Financial an unrealized loss of NT$1.3 billion on the disposal of the remaining holding.
Citigroup Global Markets retained a sell rating and a target price of NT$26 on Chinatrust Financial, while maintaining a hold rating on Mega Financial.
The US equity research firm said its downward revision of the target price for Mega Financial resulted from concern over earnings pressure, due to mounting bad lending to the Rebar Group and a dearth of catalyst.
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since
IMPROVEMENT EXPECTED: The company holds a cautiously optimistic view about this year, an official said, adding that an increase in wafer shipments is predicted United Microelectronics Corp (UMC, 聯電) yesterday reported its weakest quarterly net profit in three years, which it attributed to a prolonged inventory correction. However, the company said it expects wafer shipments to grow about 3 percent this quarter as demand from communication and computer segments is to pick up from last quarter. Net profit plunged 35.4 percent to NT$10.46 billion (US$321.6 million) in the first quarter of the year, compared with NT$16.18 billion a year earlier, making it the worst quarterly performance since the first quarter of 2021. On a quarterly basis, net profit declined 20.8 percent from NT$13.2 billion, the Hsinchu-based