for what it's worth, re: taiwan.
-----
SUMMARY -- Analysts' views on Taiwan earthquake
September 22, 1999 05:08 AM
SINGAPORE, Sept 22 (Reuters) - The following are research comments from key investment houses following the earthquake that devastated Taiwan.
The island's worst earthquake on record killed more than 1,700 people and buried 2,800 under mountains of rubble on Tuesday.
* CREDIT SUISSE FIRST BOSTON:
If damage is mainly confined to Nantou and Taichung, impact to the Taiwanese economy would be limited.
But if Kaohsiung and Hsinchu, located about 70 miles from Nantou, are affected by more than a temporary disruption, the damage could be significantly larger.
Assuming no damage to steel and electronics factories in Kaohsiung and Hsinchu, CSFB estimates a five percent loss in industrial production and US$1 billion loss from exports for September.
The CPI could surge above five percent in the month, with the construction industry seen benefiting. Loss in GDP for 1999 could amount to 0.2 percent to 0.4 percent.
* FRASER-AMMB RESEARCH:
Taiwan supplies 12 percent of world semiconductor demand. Overall, estimate the quake will lead to production delays of up to three weeks "that in turn translates into estimated profit cuts amounting to more than 10 percent."
Hotung Investment Holdings, the largest high-technology venture capital company in Taiwan, is expected to see some delay in its divestment schedule, "thus impacting 1999 bottomline."
But 2000 earnings will be largely unaffected as companies will resume normal production by then.
Singapore Airlines revenue to be marginally affected. No impact seen on Want Want Holdings Ltd , which has a rice cracker factory at I-Lan and food concern Cerebos Pacific Ltd, with a factory located in central Taiwan.
Singapore Telecommunications Ltd's ISP network under Singnet was affected by the quake which damaged an offshore undersea cable linking access to websites in North America.
But the traffic was diverted to other cables and access restored on Tuesday.
* MORGAN STANLEY DEAN WITTER:
American International Group is a major life insurer in Taiwan, and its Nanshan Life is the third largest in the country. Company has catastrophe reinsurance in life business which would "mitigate the losses."
AIG is not a major property-casualty insurer in Taiwan.
Life insurance in Taiwan had premiums of $12.5 billion in 1997, while property-casualty had $4.8 billion of premiums.
* MERRILL LYNCH:
Assuming no more significant structural damage has occurred, estimate that one half and one week of production at semiconductor makers will either be lost or scrapped.
Sudden loss of power would require fab managers to recalibrate and safety-check their lines before restarting production. This could take up to a week.
Estimate Taiwan should amount to 10 percent of finished product global semiconductor production in value terms during 1999. Taiwan DRAM production is between five and 10 percent of global total.
On insurance, total insurance premiums in Taiwan for life and nonlife in 1997 were $17.3 billion (Turkey's total market was $1.8 billion in 1997). Estimate that nonlife insurance represents about 30 percent of total Taiwan market.
On synthetic fibres, companies have been hit hard as most of the plants are near Taipei.
Realigning machines is expected to take a month. Given that Taiwan is one of the biggest synthetic fibre manufacturers in the world, this will likely cause material shortage in global supply and push up prices.
* DAIWA:
Most Taiwanese semiconductor lines will be shut for a few days until the main power supply is restored. Although there seemed to be no structural damage to the wafer fabs in the Hsinchu Park area, employees are currently prohibited from entering the fabs due to the threat of potential gas leaks.
Many chip makers cannot confirm damage as they need to conduct full tests on equipment once the main power is restored.
According to Hyundai, contract prices on DRAMs may go up further next month from the current US$8 level due to the power outage.
* CIBC:
Uncertainty of supply disruption could result in near-term volatility in shares of fabless semiconductor stocks that use Taiwan Semiconductor Manufacturing Corp or UMC Group as their foundry choice.
Together these two leading foundries provided 48 percent of worldwide fabless wafer supply in 1998.
The fabless companies include Altera, DSP Group, Xilinx, PMC-Sierra, Zoran and Genesis Microchip.
Additionally, MPU suppliers AMD and Intel could also be affected because, although each produces its own devices, approximately one third of the world's motherboards are assembled in Taiwan.
* SG ASIA CREDIT:
Thailand's KCE Electronics Plc and Hana Micro Electronics Plc rated "buy" on expectations they will benefit from the quake.
KCE, a maker of printed circuit boards, could benefit from new orders and higher PCB prices. Hana, an integrated-circuit packager, could see new orders at its Hong Kong Technology BGA packaging factory as some chip makers shift orders away from Taiwanese firms.
Sees target price of 97 baht for KCE against current price of 76 baht, and projects Hana price of 147 baht against current 138 baht price. |
