JP Morgan cuts FCFC’s 2008, 2009 EPS estimates

08 April 2008 14:55  [Source: ICIS news]

MUMBAI (ICIS news)-- JP Morgan cut Taiwan-based Formosa Chemicals and Fibre Corporation's (FCFC) 2008 and 2009 earnings per share (EPS) estimates by 8% and 11% respectively to reflect the bank's continued bearish outlook for the aromatics sector, it said on Tuesday.

“FCFC’s aromatics capacity increase in 2007 may not be enough to offset the margin decline,” the bank said.

The bank lowered the chemical and fibre manufacturer’s EPS estimate for 2008 to New Taiwan dollars (NT$) 7.50 ($0.24) and to NT$6.94 for 2009.

The bank set a new price target of NT$74/share while maintaining a "neutral" rating on FCFC’s outlook.

The downside risk remained with the inability of aromatics producers to pass on increased naphtha feedstock costs due to industry overcapacity, said JP Morgan.

Increasing refining capacities in Asia would also add pressure to benzene margins as new units were rolled out, JP Morgan said.

The company’s stock closed down 0.29% at NT$75.2 on the Taiwan Stock Exchange.

($1 = NT$30.41)

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Author: Aaron Rodrigues
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