FTC Credit Ratings:
In order to coordinate the loan assurance on the joint investment in Formosa Ha Tinh Steel Corp. (FHS) with Formosa Plastic Corp. (FPC) group, the Company accepts the suggestion of the finance division of FPC group to adopt Taiwan Ratings' credit ratings from 2014 so as to strengthen the effectiveness of endorsement assurance.
Based on our presentation, its interview with our senior executives at our Taipei branch on September 20, 2019, and its inspection of FTC's operational structure, Taiwan Ratings gives FTC's six-consecutive-year financial performances the following corporate credit ratings.
|Year||Long-term credit rating||Short-term credit rating||Rating outlook|
Explanation of 2019 corporate credit ratings:
Taiwan Ratings Corp. today (Oct. 22, 2019) affirmed its 'twA+' long-term and 'twA-1' short-term issuer credit ratings on Formosa Taffeta Co. Ltd. The outlook on the long-term rating is stable.
The ratings reflect our expectation of Formosa Taffeta's stable market position in its core fabric business over the next one to two years, underpinned by the company's well-established long-term customer relationships, good technology capabilities, and low cost overseas capacity in Vietnam and China. Several factors temper these strengths, including stagnant global demand and increasing competition. In addition, the company faces somewhat high, albeit moderating, business risk in its IC assembly and packaging subsidiary because of customer concentration and industry volatility.
The ratings on Formosa Taffeta also incorporate our assessment that the company's diversified business portfolio should help to lower its overall performance volatility. In addition, the ratings reflect our view that the company will maintain its moderately strategic status within the Formosa Plastics Corp. group over the next two years.
Formosa Taffeta recently announced its plan to acquire a 50% stake in Swiss-based textile company, Schoeller Textil AG, in 2020. The investment amount will be for no more than $40 million Swiss Franc (about NT$1.2 billion), which we have already factored into our base case assumptions, and will not have material impact on Formosa Taffeta's financial strength or our rating and outlook on the company.