Taiwan's top corps are upbeat, but challenges remain

Taiwan's top companies will be challenged by a slowing global economy and rising material prices in 2008, but closer integration with China has buoyed corporate sentiment. That's according to a report titled "Taiwan Top 100 Corporates", jointly published today by Standard & Poor's Ratings Services and its subsidiary Taiwan Ratings Corp.

"This year's publication is, in effect, a sequel to last year's "Taiwan Top 50 Corporates" book," said credit analyst Daniel Hsiao. "This year's publication features credit comments on companies that did not make the Top 50 list in 2006 but made it into the Top 100 sales rankings in 2007."

The survey reveals that while overall credit quality for Taiwan's top 100 corporates was generally stable in 2007, overall profitability weakened slightly. However, some industries experienced a boom: For instance, the median operating margin of thin film transistor liquid crystal display panel makers rose to 30% in 2007 from 13% in 2006. "Also, as the operating environment is becoming tougher, the possibility of corporates pursuing M&A activity is also rising, which could dramatically alter the credit quality of an individual company," said Mr. Hsiao.