Standard & Poor's Ratings Services (S&P) and its local subsidiary, Taiwan Ratings Corp (
S&P adjusted its long-term credit rating on Hon Hai to "A-" from "BBB+" with a stable outlook, the ratings agency said in a statement.
"The upgrade reflects Hon Hai's strengthened market position and robust earnings performance, which is supported by its strong component capability, leading production technology,and an unrivaled vertical integration production process," Ryan Tsang (曾怡景), S&P senior director for corporate and financial institution ratings, said in the statement.
Hon Hai is the nation's largest maker of electronic components and the world's largest provider of electronics manufacturing services.
"The company has built an entrenched market position over the years by expanding its vertically integrated production model and strengthening its component manufacturing capabilities," the statement read.
"As a result, it has established a strong customer base with major global players in a wide range of electronics products, and this offsets the risk of customer concentration," it said.
S&P said that no other competitors would pose a direct threat to Hon Hai in the near future, although other companies had been trying to follow the Taiwanese firm's business model of late.
Hon Hai's prudent financial policy with modest debt usage was also expected to help the company maintain a moderate leverage over the medium term, S&P said.
Taiwan Ratings, meanwhile, recommended a "twAA+" corporate credit rating on Hon Hai with a stable outlook, up from a rating of "twAA," it said in a separate statement yesterday.
Shares of Hon Hai rose NT$0.5, or 0.23 percent, to close at NT$217 on the Taiwan Stock Exchange yesterday. The news of the ratings upgrade came after the local stock market closed.
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