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September 19, 2017

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LCY Chemical cap down by NT$5.4 bil.

As more investigative findings point toward LCY Chemical Co. (LCY, 李長榮化學工業) as the culprit in last week's Kaohsiung gas leak explosions, the company has seen its market capitalization diminish by an estimated NT$5.4 billion following four days of sharp declines in its share price.

LCY shares on July 31 stood at NT$25 and dove by 25 percent to yesterday's closing price of NT$18.75, following four consecutive sessions of 7-percent slumps. In the wake of the selling spree, LCY's market capitalization is estimated to have been diminished by NT$5.4 billion, as immense reparations obligations cast gloom over the company's prospects.

The company yesterday emphasized its capacity to fulfill its responsibilities in the blasts and stated that its operations and ongoing investment plans are largely unaffected. Meanwhile, the Kaohsiung City Government has motioned for a provisional seizure of the company's assets.

Sell orders for about 60 million LCY shares are still awaiting processing in the market, according to reports. In addition, only 200,000 shares managed to change hands throughout yesterday's session.

According to the company's financial statements, LCY in the first quarter of this year achieved an earnings-per-share performance of NT$26.

Insurance Sector Rocked by LCY Downfall

Reports indicate that concern is rising among investors over the estimated 120 million LCY shares held by the domestic insurance sector. Impacts to the market capitalization of local insurance companies are estimated at NT$690 million, according to reports. As of May 2 this year, four of the top-ten LCY shareholders are insurance carriers, led by Fubon Life's (富邦人壽) holding of 58.69 million shares, Cathay Life Insurance's (國泰人壽) 35.301 million shares, Shin Kong Life's (新光人壽) 16.564 million shares and NanShan Life's 15.913 million shares.

The 25-percent share price tumble has also diminished the market capitalization of local insurance companies holding LCY's shares by about NT$690 million.

Institutional investors noted that LCY had once been a viable investment target, paying out yearly dividends exceeding NT$2.6 per share from 2009 to 2011.

FPG Records Gain Despite Sector-wide Slump

Amid the sector-wide slump, shares of companies under the Formosa Plastics Group (台塑集團), including the Formosa Plastics Co. (台塑) and the Nan Ya Plastics Co. (南亞), recorded intraday gains above 2 percent, while shares of CPC Co. (中油) affiliates with roles in the state-run company's supply chain such as the China Petrochemical Development Co. (中石化), the Taiwan Styrene Monomer Co. (台苯), the Asia Polymer Co. (亞聚) and USI Co. (台聚) had fallen to hit nearly 7 percent down from their opening prices during yesterday's trading.

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