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May 30, 2017

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Nuke 4 'mothballing' to result in 3% corporate profit loss: firm

TAIPEI, Taiwan -- Credit Suisse recently projected that the mothballing of the Fourth Nuclear Power Plant (Nuke 4) would in four years increase local electricity bills by 10 percent, or 3 percent of corporate profit loss.

The Swiss bank earlier this week made the aforementioned forecast in a research note, saying that there will be consequences in the wake of Nuke 4's suspension.

Although the unfavorable news of the halt to Nuke 4 construction, Credit Suisse said, proves a short-term twist on the local equity market, the incidence will inevitably exact a high price on electricity bills and so with corporate profits.

Credit Suisse projected that the suspension of Nuke 4 is expected to result in a 10-percent increase in electricity bills, which amounts to 3 percent of corporate profit loss.

Nuclear Power Contributes 18% Supply

The existing three nuclear power plants currently account for 18 percent of Taiwan's electricity supply. Without the new power plant, Taiwan would need to increase its reliance on alternative and costlier means of power generation, Credit Suisse analysts said.

If Taiwan embarks on the path toward a nuclear exit, electricity bills are expected to soar 10-15 percent by the end of 2018 while surging an additional 10-15 percent by 2021 after a nuclear power plant is decommissioned.

After some number-crunching, Credit Suisse concluded that each 10-percent hike in the cost of electricity comes at the expense of 3 percent of corporate profit, with steelmakers and automation companies suffering the biggest losses, ranging 4-5 percent.

Printed circuit boards (PCB) industry will have to pay a high price and is expected to face a 3 to 4 percent profit loss.

State-owned China Steel Corporation (CSC, 中國鋼鐵) is the largest steelmaker in Taiwan, while automation stocks are led by Hiwin Technologies Corp. (上銀科技). Standard bearer PCB suppliers on the island include Unimicron Technology Corp. (欣興電子), Compeq Co. (華通電腦), Unitech PCB Corp. (耀華電子) and WUS (楠梓電子).

Referendum Might be Held at Year-end

Amid mounting public pressure, the Taiwan government announced April 27 that it decided to suspend construction of the controversial Nuke 4 until a referendum on the continued use of nuclear power is held.

A date has not yet been decided but the referendum could be held as early as November alongside local government elections, or may be delayed until the 2016 presidential election, according to Credit Suisse.

The Central News Agency yesterday reported that the Ministry of Economic Affairs has projected a 40-percent increase in Taiwan's electricity rates if the nearly completed Fourth Nuclear Power Plant is not put into operation and if the three operating nuclear plants are retired in favor of natural gas power.

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