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Top Taiwanese firms in good shape: TRC

The credit profile of Taiwan’s top-tier companies remained resilient, though slightly weakened, amid the global slump thanks to their financial strengths, a supportive domestic banking sector and low lending costs, Taiwan Ratings Corp (TRC, 中華信評) said in a report yesterday.

The company, the local unit of Standard & Poor’s, said the overall credit outlook of the nation’s top 100 largest firms remained stable despite rising negative risks.

“The leading firms by and large maintain safe liquidity even though the world recession has dampened their profitability and pushed up their outstanding loans,” Daniel Hsiao (蕭黎明), director of corporate and funds ratings, told a seminar organized by his company in Taipei.

The median profit margin for technology companies dropped to 4.9 percent last year, from 7.8 percent a year earlier, with gains for flat-panel makers contracting from 30 percent to 20 percent, the report said.

Meanwhile, non-technology companies saw their profits shrinking from 10.1 percent in 2007 to 5.4 percent last year, the report said.

Hsiao said some companies with greater exposure to global market volatility would continue to experience strong constraints on their operating performance.

“Firms in the dynamic random access memory, thin-film-transistor liquid-crystal display, container shipping and petrochemical sectors may need to find ways to maintain their credit quality under a prolonged market downturn,” he said.

Most of the top 100 firms are in the high-tech industry, followed by 10 percent in the petrochemical sector and another 5 percent in the steelmaking business, the report showed.

Raymond Hsu (許智清), another TRC analyst, said orders from China partly offset the sharp decline in global demand, although visibility remained poor. He said he expected export-related sectors to put up a stronger-than-expected showing this quarter.

The analysts said economic and industrial developments overseas would continue to affect firms’ credit profile. Warming economic ties between Taiwan and China was another variable, they said.
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