Shares in Ve Wong Corp surge to three-year high

Shares of Ve Wong Corp (味王), a local manufacturer of food, drinks and seasonings, surged to a three-year high yesterday on an announcement of a big order and anticipated returns from investment in renewable energy.

Shares of Ve Wong rose by the 7 percent daily limit for the second day yesterday, closing at NT$18.4 on the Taiwan Stock Exchange.

Ve Wong on Monday signed a contract with Mizkan Asia Pacific Pte Ltd, an arm of Mizkan Group Co, the largest vinegar producer in Japan. As a result, Ve Wong will be the exclusive manufacturer of Mizkan's sauce products sold in Taiwan for the next three years.

The companies refused to reveal the value of the contract.

Mizkan set up a branch in Taiwan in April last year. As of April this year, the company achieved sales of ?200 million (US$1.6 million) in the local market, an executive at the Japanese company said.

Ve Wong's investment in a bio-fuel plant in Thailand is also about to bear fruit. The plant -- 49 percent owned by Ve Wong and 51 percent owned by its Thai partners -- will be completed by the end of the year and begin mass production next year, chairman Egawa Taketada told reporters on Monday.

Using tapioca as bioethanol feedstock, the plant will churn out 36,000 kiloliters of bioethanol per year, he said.

Governments worldwide are encouraging the use of alternative fuels to limit carbon dioxide emissions from fossil fuels. The 27-nation EU wants biofuels to make up an average 5.75 percent of transportation fuel by 2010. Last week, food maker Associated British Foods Plc, chemicals producer DuPont Co and BP Plc, Europe's second-largest oil company, formed a joint venture to build a US$400 million biofuels plant in England, initially using wheat to make bioethanol and to research advanced biofuels.

In 2005, with the government's sponsorship, Taiwan NJC Corp (台灣新日化) set up the nation's first biodiesel plant to produce both ethanol and diesel products.

Taiwan NJC, a joint venture of Nice Group (耐斯集團) and New Japan Chemical Co, manufactures a variety of surface active agents for downstream users, according to the company's Web site.

To capitalize on the demand for renewable energy, Ve Wong will set up a similar plant in Cambodia, in addition to a sugar cane-based bioethanol plant in Vietnam in the near future, Taketada said.

In the local market, Ve Wong plans to continue to revitalize its previously long-idle assets. The firm developed an 18-story office building in Taipei City's Tianmu area last year, an investment that is expected to pay dividends next year.

Ve Wong plans to develop vacation homes on a 40,000 ping (132,000m2) parcel of land in Hsinchu this year, Taketada said.

Last year, Ve Wong posted an after-tax deficit of NT$139 million, or minus NT$0.66 per share. Sales for the first five months of this year increased by 4.23 percent from the same period last year to NT$706.31 million.

Additional reporting by bloomberg