Taiwan’s top 50 corporations could see their profitability improve in the next 12 months, backed by continued robust demand for electronics goods in which local firms have a competitive advantage globally, Taiwan Ratings Corp (中華信評) said in a report released on Tuesday.
The leading 50 corporations could achieve an overall increase of 16.6 percent in earnings before interest, taxes, depreciation and amortization (EBITDA) this year, slowing from a 19 percent rise last year, said Raymond Hsu (許智清), a corporate credit analyst from the local arm of S&P Global Ratings.
Meanwhile, their average EBITDA margin could rise from 15.1 percent to a decade-high of 16.2 percent, Hsu said.
Photo: Clare Cheng, Taipei Times
Companies’ creditworthiness has picked up across sectors, with high-tech firms accounting for half of the top 50, followed by suppliers of commodity chemicals, he said.
Taiwanese tech firms have benefited from the low-contact economy fueled by remote working and learning trends, Hsu said, adding that e-commerce operators, logistics service providers and shipping companies also gainedfrom behavioral changes caused by the COVID-19 pandemic.
Looking ahead, robust export demand would further boost their credit strength over the coming year, he said.
Profitability and cash flow at the top 50 corporations would remain near current record levels well into the first half of next year on the back of demand recovery in advanced markets, thanks to the positive effect of COVID-19 vaccinations, Hsu said.
A fast increase in cash flows has enabled the companies invest aggressively and offer generous dividend payouts, he said.
However, uncertainty lingers, as infections linked to the Delta variant of SARS-CoV-2 are escalating around the world, and Southeast Asian countries have introduced lockdowns to rein in the outbreak, Hsu said.
Taiwan Ratings said that local semiconductor and shipping companies could experience supply gluts in three to five years because they have expanded their capacity.
Congestion at ports caused by COVID-19 infections — rather than a lack of ships and containers — have slowed sea transportation and pushed up freight rates, a phenomenon that could reverse once the outbreak is under control, the agency said, opposing views by other research bodies and shipping companies.
The same issue could hit semiconductor suppliers that are building plants at home and abroad to ease chip shortages, Hsu said.
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