Taichung-based Full Wang International Development Co (富旺國際開發) yesterday said that its business outlook remains upbeat for next year, as low interest rates and ample liquidity would continue to support the property market despite the central bank tightening credit controls.
Property development would require twice as much capital after the central bank set the loan-to-value ratios at 50 to 60 percent, from 80 percent previously, Full Wang chairman Lin Cheng-hsiung (林正雄) said.
“The measures would deal a serious blow to small builders and developers without sufficient capital on hand, but that will not affect Full Wang because the company has two earnings engines: developing and selling residential, as well as industrial, properties,” Lin told an online investors’ conference.
Photo: Hsu Yi-ping, Taipei Times
Sales of residential properties and industrial plots have contributed to 74 and 25 percent of the company’s revenue respectively, Full Wang data showed.
The company has acquired enough land lots to build new properties for the next four years in Taiwan, Lin said.
New residential buildings are being built in central Taichung to take advantage of the forthcoming MRT rail system, and construction is under way at industrial parks in Taoyuan and Kaohsiung to cater to companies that are reshoring, he said.
The company said that it has sold 82 percent of a 172-unit residential complex near the Taichung High Speed Rail Station.
Full Wang expects the operating environment to remain favorable next year, as global central banks would still maintain record-low interest rates and more companies would invest in Taiwan to cope with US-China trade tensions.
Housing transactions next year would likely remain the same as this year at 320,000 units, Lin said.
However, analysts said that it is better to avoid property-related shares that took a hard hit from the central bank’s credit controls.
The sector might continue to underperform, although some companies have reported decent earnings, Capital Investment Management Corp (群益投顧) said.
Full Wang’s net income for the first three quarters fell 65 percent year-on-year to NT$31.15 million (US$1.09 million), or earnings per share of NT$0.2, while cumulative revenue in the first 11 months rose 58.25 percent to NT$2.16 billion.
The company’s shares yesterday closed down 4.72 percent at NT$17.15.
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