The share prices of the four major units of Formosa Plastics Group (FPG, 台塑集團), the nation’s largest industrial conglomerate, declined by a range of 3.96 percent to 6.29 percent this week, as investors offloaded holdings in these companies fearing that their profits would be dragged by falling oil prices.
Lower oil prices have pushed down prices of olefin products and other downstream petrochemical products, forcing the four companies — Formosa Petrochemical Corp (台塑石化), Formosa Chemicals & Fibre Corp (台灣化學纖維), Formosa Plastics Corp (台塑) and Nan Ya Plastics Corp (南亞塑膠) — to book losses related to declining inventory prices, Jih Sun Securities Investment Consulting Co (日盛投顧) said in a report issued on Tuesday.
Jih Sun analyst Jun Liao (廖景濬) forecast that Formosa Petrochemical, the nation’s only listed oil refiner, would report pretax losses of NT$7.2 billion (US$230.12 million), or NT$0.76 per share, this quarter, down from a pretax profit of NT$7.89 billon in the previous quarter.
Formosa Chemicals, which produces aromatics and styrenics, would post pretax losses of NT$3.4 bilion, or NT$0.58 per share, this quarter because of a sharp decline in its product prices, Liao said.
Due to cross-holdings among firms under the group, losses at Formosa Petrochemical and Formosa Chemicals would eat away profits at Formosa Plastics and Nan Ya Plastics, Liao said.
Formosa Plastics Corp, the nation’s largest producer of polyvinyl chloride, would report a pretax profit of NT$270 million, or NT$0.04 per share, while Nan Ya Plastics, the nation’s largest plastics maker, would a post profit of NT$2.12 billion, or NT$0.27 per share, Liao said.
On Monday, the four companies posted collective revenues for last month of NT$136 billion, down 16 percent year-on-year and 9 percent month-on-month, affected mainly by weaker petrochemical and refining prices, as well as lower refinery utilization rates given a scheduled maintenance shutdown last month.
This month, Formosa Chemicals plans to temporarily shut down its first and second styrene monomer factories because the two factories are of lower efficiency and not profitable due to current product prices, general manager Hong Fu-yuan (洪福源) said on Monday.
The company would also stop making polycarbonate for 10 days this month and stop producing oxylene, except to satisfy demand from Nan Ya Plastics, to reduce inventory levels, Hong said, adding that the utilization rate for its plastics division would remain at 80 percent this month, the same as last month.
Nan Ya Plastics chairman Wu Chia-chau (吳嘉昭) said the utilization rate of its ethylene glycol plants would be 80 percent this month.
Utilization rate for the company’s four ethylene glycol factories in Taiwan would be 100 percent, while its ethylene glycol factory in the US, which can produce 360,000 tonnes a year, would be 100 percent after it completes maintenance on Dec. 20.
Despite lower prices for ethylene glycol, the margin for the product can still be sustained, Wu said.
The current inventory level of ethylene glycol in China is 660,000 tonnes, a relatively low level, and the need to replenish inventory in China and rising demand in the US next quarter would boost market sentiment, Wu said.
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
Nintendo Co is raising its target for Switch production to about 25 million units this fiscal year, people familiar with the matter said, as the ongoing COVID-19 pandemic keeps lifting demand and component shortages ease. The Kyoto, Japan-based company, which in April hiked orders to 22 million units by March next year, is asking partners to tack on another few million units, said the people, who did not want to be identified discussing internal goals. Assembly partners plan to work at maximum capacity through December. The new production target suggests that Nintendo is likely to outperform its Switch sales forecast of 19 million
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US