The Rundown: PSMC Profit Growth, Taipower Corporate Bonds, and Strong PC Sales Revenue

A weekly snapshot of Taiwan business news stories brought to you by CommonWealth and AmCham Taiwan’s TOPICS

PSMC Reports 37% Revenue Growth in 2020

Powerchip Semiconductor Manufacturing Corp (PSMC) announced last Tuesday that it officially turned a profit in 2020, with revenue of NT$45.68 billion (USD$1.62 billion) and a net profit of NT$3.81 billion (USD$135 million) after tax, or $1.23 EPS.

PSMC delisted from the Taiwan Stock Exchange at the end of 2012 when its stock price dipped below its book value and its combined debt totaled NT$120 billion (US$4.26 billion), turning stocks held by 270,000 small investors into wallpaper. After eight years of dormancy, PSMC’s founder and chairman Frank Huang will finally complete a restructuring of the company in May this year. When the company returned to the Taiwan Stock Exchange in December last year, trading volume surged to nearly 130,000 shares on the first day.

PSMC said Wednesday that it plans to raise around NT$12 billion (US$426 million) in capital, with a short-term share price of NT$40 per share. The purpose of the increase is to expand production capacity, improve production processes, and enhance research and development capabilities.

The capital increase echoes Mr. Huang’s view that production capacity for wafers was “unimaginably tight.” He added that this issue would not be resolved until 2022. The company’s NT$12 billion capital increase is seen as a sign that the foundry’s capacity crunch may be worse than expected. PSMC said the funds will mainly be allocated toward the initial construction of a 12-inch copper wafer plant, as well as the optimization of existing manufacturing processes. The company is expected to break ground on the new plant on March 25.

Taipower Issues Corporate Bonds for LNG

Taiwan Power Co. (Taipower) announced last Wednesday plans to issue in mid-April its first unsecured corporate bonds of 2021, totaling NT$17.65 billion (US$626 million). The bonds will be used to finance development of its energy projects around Taiwan. The company will also issue another three to four series of bonds – including green bonds – with the total amount of the bonds issued this year expected to reach NT$100 billion (US$3.55 billion).

Taipower said that to continue to develop multiple power sources and ensure stable power supply to the grid, the first phase of financing will mainly be for new liquefied natural gas (LNG) generators at its Taichung Power Plant, expansion of its combined-cycle LNG plant in the Datan district of Taoyuan, and its seventh transmission and substation project, among others.

Taipower issued five rounds of corporate bonds in 2020, totaling NT$84.1 billion (US$2.98 billion), including NT$12.8 billion (US$454 million) of green bonds. It is estimated that the monetary value of bonds issued by the company this year will increase. The duration and scale of green bonds are also expected to increase compared to previous years.

The company said it has begun plans to build several gas-fired units this year. Among these, the Datan Power Plant will supply gas to the China Petroleum Company’s (CPC) third LNG terminal, which has undergone an environmental impact assessment (EIA) and is expected to be completed in 2025. However, there has been public controversy over the third terminal with regards to the nearby algal reef conservation area. Local conservation groups argue that the terminal’s development could damage the reef, and a referendum against its construction has garnered over 600,000 signatures.

Taiwan’s PC Giants Post Stellar February Sales Revenue

Taiwanese PC maker Acer reported revenue of NT$20,318 billion (USD$721 million) in February, an 80.9% year-on-year increase and the company’s highest figure in five years, thanks to the rise of the stay-at-home economy and demand resulting from work-from-home arrangements.

Acer noted that February sales of gaming products grew 91.3%, Chromebooks jumped 631.3%, monitors grew 56.7%, and desktops grew 34.3%.

In addition, the conglomerate’s business diversification strategy continued to gather momentum. February revenue at Acer Inc., Acer Info, Zhaopin Services, and Acer International all increased from the same month last year.

Last week, the Taiwan Ratings Corp. granted Acer a long-term credit rating of twA and a short-term credit rating of twA-1 with a “stable” outlook. This is the first time Acer has received this type of credit rating since its founding.

According to Taiwan Ratings, Acer’s global market share is lower and its profitability weaker than other players in the same field. However, it has the opportunity to take advantage of the fast-growing gaming PC segment to sustain its market share and slightly increase its profitability over the next two years.

Acer’s new services revenue from its cybersecurity and IT services should generate higher margins, Taiwan Ratings said, adding that the increased revenue could moderately improve the company’s operating performance.

Meanwhile, rival Asustek’s February revenue was NT$33.356 billion (USD$1.18 billion), up 57.6% from a year earlier and the highest in four years. The company is bullish about first quarter earnings; its two main product areas of motherboards and PCs have performed well this quarter and orders are projected to remain strong through Q2.

This edition was translated from the original Chinese by Austin Babb.

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