Taiwan's leading tinplate maker Ton Yi to invest in JFE of Japan

Taipei, March 20, 2008 (CENS)--To meet the advent of an era of high-price raw materials, Ton Yi Industrial Corp., one of Taiwan's leading manufacturers of tinplates, has resolved to set aside one billion Japanese yen to invest in JFE Holdings Inc., Japan's second-largest manufacturers of iron and steel.

JFE is now one of Ton Yi's big shareholders and supplies hot-rolled steel to the Taiwan-based tinplate manufacturer. By way of the cross shareholdings, Ton Yi and JFE will cement their strategic-alliance relations and boost their industrial competitive edges. At present, JFE holds 1.715% stake in Ton Yi.

Ton Yi will dole out NT$0.8 (US$0.026 at US$1:NT$30.5) in cash dividend per share this year, the highest dividend level over the past seven years. The company will pass the dividend resolution at a general shareholders' meeting slated for June 19.

Thanks to the price hike in the raw materials offered by upstream steel manufacturer-China Steel Corporation (CSC), Ton Yi will be able to raise the selling prices for its products this year. As a result, Ton Yi predicted it would see earnings this year exceed NT$1.382 billion (US$45.31 million) posted last year.

Ton Yi said it would set aside one billion Japanese yen, or about NT$318 million (US$10.42 million), to procure 250,000 JFE shares from the Japanese securities market. After the share-procurement deal is completed, Ton Yi will hold a 0.04% stake in JFE.

Ton Yi noted it would hold the JFE shares in a long term because of it will render an over 3% dividend yield rate. JFE saw share price fall to around 4,000 Japanese yen per share at present from a peak of 7,000 Japanese yen registered last year.

A medium-sized manufacturer, Ton Yi heavily relies on the supply of hot-rolled steel from JFE, especially at the time of a shortfall in supply of raw materials.

JFE is capable of rolling out 34 million metric tons of crude steel per year, double that of CSC's annual output, Taiwan's largest integrated producer of steel products. At present, Ton Yi procures over US$200 million worth of cold-rolled steel from JFE a year.

In addition to tinplates, Ton Yi also produces cold-rolled steel. Thanks to the price hike in tinplates and handsome profits from investing in mainland China, Ton Yi scored NT$1.382 billion (US$45.31 million) in after-tax earnings on sales of NT$22.689 billion (US$743.9 million) last year. The company posted NT$0.92 (US$0.03) in earnings per share last year, up 39% year-on-year.

The company posted NT$12.638 billion (US$414.36 million) in sales in the mainland last year, up 32%. It registered NT$948 million (US$31.08 million) in earnings in the mainland last year, up a whopping 120% year-on-year.

Tinplates are widely used in the industries of food, chemical and electronics. As mainland China is expected to see promising economic outlook, the tinplate-manufacturing sector will be very promising this year.