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Hon Hai sees 15% sales growth in 2014: Gou

TAIPEI, Taiwan -- Hon Hai Precision Industry (鴻海精密) Chairman Terry Gou (郭台銘) recently expressed his moderate confidence that the group will continue its 15-percent sales growth for 2014, a growth which amounts to NT$600 billion.

Hon Hai Precision Industry, known as Foxconn outside Taiwan, is the world's largest contract electronics manufacturer. On a family event held earlier, Gou shared his business outlook on 2014.

While speaking about this year's earnings result, Gou said Hon Hai Precision's earnings per share (EPS) will outperform that of 2012 and that he's optimistic about economic conditions for 2014.

Not as optimistic as he has been over the last few years, Gou said he has “moderate” confidence that Hon Hai Precision would fulfill the set goal of 15-percent annual sales growth.

On the basis of the group's average annual consolidated revenues of NT$4 trillion, Terry Gou is obliged to create an extra of NT$600 billion in 2014 to honor his word.

Regarding these speed bumps, Gou said that Hon Hai Precision's 2013 revenues would present a high basis period. Moreover, Hon Hai Precision is going through a business restructuring plan by splitting up new businesses which, in turn, would pull back the group's growth momentum. “However, I personally think that Hon Hai will put if off,” Gou said.

Gou said Hon Hai Precision would shift manufacturing of 60-inch and 70-inch flat screen TVs to the United States from Mexico in consideration of lower transportation expense and cheaper labor. Accordingly, the move will dramatically increase Hon Hai Precision's U.S. investments from the current US$40 million, Taiwan-based papers reported.

Gou emphasized that Hon Hai Precision will also expand its investment in Taiwan, adding that the group is scheduled to issue 100 million restricted shares to retain talent.

He indicated that Hon Hai Precision's Indonesian investment plan will be activated after Lunar New Year holidays by then factory plot procurement issue will be settled.

Hon Hai Precision, which assembles iPads and iPhones for Apple Inc., lost 0.38 percent to end at NT$79.

Formosa Bonds Market May Boomerang: Gou

Broaching the subject of Taiwan's effort to develop the Formosa bonds market, Gou said he can conceive of a situation where Chinese banks would use the funds raised in Taiwan to fund peer companies in mainland China as Taiwanese flat panel makers are facing growing competition from China.

“I am not against the development of Formosa bond market, although Hon Hai Precision doesn't have a plan to issue Formosa bonds,” Gou added.

“However, the government should be careful of the possibility that those Chinese banks who raised reminbi in Taiwan might instead provide stronger loan supports to Chinese panel makers,” he said.

“In addition, the costs of reminbi-denominated bond issue are relatively lower in Taiwan than in other oversea market, a fact that will attract more mainland companies who are shut outside Chinese banks to issue Formosa bonds,” Gou said.

Bank of China, Bank of Communications, China Construction Bank and Agriculture Bank of China issued and listed 6.7 billion yuan net worth of Formosa bonds on Taiwan's over-the-counter market on Dec. 10.

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