Taiwan Ratings Corp (中華信評) has upgraded the outlook for Taipei Financial Center Corp (TFCC, 台北金融大樓), which operates Taipei 101, from “negative” to “stable,” due to recovering revenue at its shopping mall, the ratings firm said on Friday.
Taiwan Ratings also cited stable office rent income as a favorable factor as it issued a “twAA-/twA-1+” credit rating for TFCC.
“A benign COVID-19 outbreak in Taiwan has limited the potential downside risk from the pandemic on domestic consumption power,” Taiwan Ratings, the local arm of S&P Global Ratings, said in a statement. “Meanwhile, the propensity of local consumers to increase their budget for domestic consumption to replace their spending overseas amid travel restrictions could continue to fuel domestic consumption in 2021 and 2022.”
Photo: Ann Wang, Reuters
The 101 shopping mall has benefited from a comprehensive brand selection, which has been adjusted to cater to customers’ preferences and has enhanced its ability to fill the revenue void left by an absence of foreign tourists amid border controls, Taiwan Ratings said.
TFCC’s revenue comes primarily from the shopping mall, office rent and its Taipei 101 observation deck, the ratings agency said.
Office rents at Taipei 101 have increased slightly and demand is expected to remain stable over the next year or two, which would mean steady income for TFCC, it said.
However, income from the observation deck would remain sluggish for at least another year, as international tourism is still slow and uncertain, it said.
“We now do not expect to see recovery in the observation deck business until at least the fourth quarter of 2021, given the number of inbound tourists is unlikely to rebound significantly before then,” Taiwan Ratings said, citing uncertainty over the global pace of vaccinations and the relaxation of quarantine rules.
TFCC’s earnings before interest, taxes, depreciation and amortization (EBITDA) would rise at an annual rate of 4 to 7 percent this year and continue to recover next year amid an expected return of foreign tourists, compared with an EBITDA of NT$3.3 billion (US$116.71 million) as of September last year, the ratings agency said.
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