Minister of Transportation and Communications Hochen Tan (賀陳旦) yesterday said the ministry is willing to consider letting Chunghwa Post go public.
Democratic Progressive Party Legislator Chen Ming-wen (陳明文) made the proposal at a meeting of the Legislative Yuan’s Transportation Committee yesterday as the committee prepared to review the postal company’s budget.
State-run Chunghwa Post is the nation’s “goose with the golden eggs,” as it generates a profit each year, even though the company’s net profit has shown yearly declines, Chen said.
“Nevertheless, many people would rather have a savings account at the post office than at a bank, because they find it to be a trustworthy financial institution,” Chen said.
Asking whether Chunghwa Post planned to launch an initial public offering (IPO), Chen suggested that the company sell up to 30 percent of its shares to the public so that Taiwanese could share in the company’s profits and help oversee its operations.
When Chunghwa Post chairman Wang Kwo-tsai (王國材) denied any IPO plans, Chen asked Hochen to take the stand and comment on the possibility.
“I admire and like the legislator’s proposal [of allowing the public to own shares in Chunghwa Post]. I think the legislator proposes this idea because there have been examples of this in other countries,” Hochen said. “We could consider heading in the same direction.”
Chen also asked why the company’s net profit has shown gradual declines each year when it generates about NT$280 billion (US$9.6 billion) in annual revenue.
The company must follow new international financial reporting standards, which bars it from listing dividends as income on its balance sheet, Chunghwa Post president S.J. Chen said.
On the balance sheet, the company’s net profit might appear to be decreasing, but its net profit has exceeded NT$10 billion annually, he said.
Chen said he was concerned about the huge financial burden that the company would need to bear if the government raises the interest rate, with the amount of postal savings funds and insurance premium revenue totaling NT$6.8 trillion.
The company would need to prepare for any adverse effect caused by potential interest rate hikes, he said.
The volume of mail handled annually by the post office dropped 5.94 percent last year to about 2.38 billion pieces from a year earlier, due to the growth of electronic communications and social media, as well as the paperless policy enforced by government departments, Chunghwa Post statistics showed.
The company’s revenue reached NT$328.92 billion last year, with net profit of NT$10.61 billion, it said, adding that it expects NT$286.35 billion in revenue this year, down 0.01 percent from last year, with net profit of about NT$8.58 billion.
The company expects the volume of mail handled this year to decrease 24.94 percent, due to the loss of some mass distribution clients following last year’s increase in postage fees.
Revenue from sales to stamp collectors is also expected to drop 14.5 percent to NT$590 million this year, it said.
However, the company forecasts double-digit percentage growth in its small package delivery business this year, thanks to booming electronics commerce, it said, adding that the revenue is expected to partially offset the loss in the mail business.
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