Uni-President Enterprises Corp (UPE, 統一企業), the nation’s largest food and beverage conglomerate, might see its earnings grow at a compound annual growth rate (CAGR) of 6.3 percent from this year to 2020, Citigroup Global Markets Inc said, citing profit contributions from Uni-President China Holdings Ltd (統一中國控股) and President Chain Store Corp (統一超商).
The Tainan-based company would continue to adjust the product mix of its food and beverage business toward higher-margin items, while the two major subsidiaries would remain solid earnings contributors, Citigroup said.
Uni-President China, which is 70.5 percent owned by UPE, has proven itself superior to rival Tingyi (Cayman Islands) Holding Corp (康師傅控股) in instant noodles and beverages, while President Chain Store, which is 45.4 percent owned by UPE, has been evolving from a merchandise retailer to a competent service provider, with e-commerce being the key driver, Citigroup analysts led by Timothy Chen (陳建光) wrote in a report.
“Together, the two subsidiaries are forecast to account for 53 percent of [UPE’s] profit in 2020, versus 43 percent in 2017,” Citigroup said.
UPE on Wednesday last week reported that net profit in the April-to-June quarter rose 16.5 percent year-on-year to NT$5.48 billion (US$178.5 million).
The company’s earnings per share of NT$0.97 for the second quarter beat a market consensus forecast of NT$0.85 and KGI Securities Investment Advisory Co’s (凱基投顧) estimate of NT$0.92.
“The company’s better-than-expected profit was driven mainly by improving margins as the company continues to upgrade the value of its products,” KGI analyst Angus Chuang (莊政翰) said in a note on Friday.
In the second quarter, gross margin rose by 0.97 percentage points from a year earlier to 34.22 percent and operating margin grew by 0.79 percentage points to 7.1 percent, UPE’s quarterly financial report showed.
The figures were supported by the recovery of its Chinese business, revenue growth at its convenience store unit at home and the consolidation of President Starbucks Coffee Corp’s (統一星巴克) business in Taiwan, which helped consolidated sales rise 10.24 percent annually to NT$110.36 billion, Yuanta Securities Investment Consulting Co (元大投顧) said.
Among UPE’s major subsidiaries, Uni-President China posted second-quarter profit of 457 million yuan (US$66.76 million), up 15.5 percent annually, while Ton Yi Industrial Corp (統一實業), a tin plate and tin can unit, said profit surged 914.3 percent to NT$1.07 billion, which helped offset a 5.66 percent earnings decline at President Chain Store to NT$2.63 billion.
‘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
’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
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to