Nan Ya Plastics Corp (南亞塑膠), the nation’s largest plastics maker, said yesterday its board had approved a proposal to distribute NT$1.90 in all-cash dividends per common share based on last year’s earnings, the company said in a stock exchange filing yesterday.
The proposed cash dividend, if approved by shareholders on June 22, would be 72.7 percent higher than the NT$1.10 it paid in the previous year, which included NT$0.80 in cash and 3 percent in stock.
Two of its affiliates under the Formosa Plastics Group (台塑集團) had earlier announced their dividend plans: Formosa Petrochemical Corp (台塑石化) said on March 18 it would distribute NT$3.80 in cash per share, while Formosa Chemicals & Fibre Corp (台灣化纖) said on March 19 it would pay out NT$4.50 in cash.
COMPARISON
With Nan Ya’s stock price closing at NT$63.80 yesterday, the proposed cash dividend of NT$1.90 translates into a dividend yield of 2.98 percent. That would be higher than most local banks’ fixed-term deposit interest rate, but lower than the 6.07 percent offered by Formosa Chemicals, based on its share price of NT$74.10, and the 4.6 percent offered by Formosa Petrochemical, whose shares ended at NT$82.60.
Formosa Plastics Corp (台塑), the flagship company of the Formosa Group and the nation’s largest maker of polyvinyl chloride, is scheduled to announce its dividend plans after a board meeting on Monday.
Nan Ya Plastics’ better-than-expected dividend payout came as the Taipei-based company’s net profit last year surged 74.7 percent year-on-year to NT$16.4 billion (US$514.4 million), or NT$2.09 per share, last year, thanks to healthy monoethylene glycol (MEG) and polyester demand from China and investment income from Nanya Technology Corp (南亞科技), the nation’s largest computer memory, which broke even.
Nan Ya’s operating profit dropped 27.2 percent to NT$8.71 billion, while revenue fell 28.9 percent to NT$160.96 billion last year, the company said.
After earning NT$8.97 billion in profit in the first nine months of last year, Nan Ya reported a profit of NT$7.43 billion in the final three months. This quarterly profit indicated a continual improvement from a net profit of NT$6.87 billion in the third quarter, compared with a net loss of NT$15.43 billion during the same period in 2008, when demand was affected by the recession.
While the company’s core earnings before interest and tax (EBIT) improved to NT$3.3 billion in the final quarter of last year from NT$2.4 billion in the previous quarter, Citigroup yesterday maintained its “hold” rating on Nan Ya Plastics, with a target price of NT$65, as the brokerage said the earnings turnaround for this year from Nanya Technology had been priced in.
The firm currently holds a 34 percent stake in Nanya Technology.
PROSPECTS
Citigroup analyst Oscar Yee (余浩銘) said in a note to clients that he forecast Nan Ya would see its strongest year-on-year EPS growth this year because of the earnings turnaround at Nanya Technology, but was concerned about the projected MEG supply glut through next year.
Yee predicted that the company would post a net profit of NT$32.75 billion, or EPS of NT$4.17, this year.
Separately, Nan Ya said in another exchange filing that its board also approved a plan to raise as much as NT$10 billion by issuing seven-year unsecured corporate bonds this year to repay debt and improve its financial structure.
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