Ve Wong to Boost Value of Real Estate Assets

The Ve Wong Corp., a food manufacturer listed on the Taiwan stock market, hopes to boost profits in these recessionary times by enhancing the value of its land assets at home and abroad, said chairman Egawa Taketada at the company's general shareholders' meeting in Taipei on June 25.

To do that, the company plans to rebuild its headquarters at the intersection of Zhongshan N. Rd. and Minsheng E. Rd. in Taipei within three years. It will also apply for rezoning its Sanchong plant site into a commercial-use land, and construct a business building there. The feasibility of redeveloping Ve Wong's plant in Vietnam into a large-sized shopping mall is also being assessed. If these projects go through, they will help the company earn lucrative amounts of rental income over the long term.

Ve Wong was founded in 1959 and has developed a wide range of food products including instant noodles in polybags, metalized bags, and bowls with and without retort pouches (also known as soft tins); instant soup; monosodium glutamate (MSG); IG-enriched MSG; soup base seasonings; spice powder mix; soy sauce; canned fried gluten; canned mixed Chinese-style porridge, canned drinks (asparagus juice, lemon tea, peach juice, guava juice, orange juice, mixed fruit and vegetable juice, winter melon juice, honey herbal jelly, paochong tea, and barley); pre-cooked Chinese-style fast foods in retort pouches; and mineral water in PET (polyethylene terephthalate) bottles.

With four distribution centers and 25 sales offices strategically located around Taiwan, Ve Wong has built up a strong distribution network for its own foodstuffs as well as for imported products as canola cooking oil from Canada, Shochu spirits from Japan, and pure glacier water from Alaska.

First Dividend in a Decade

At the annual shareholders' meeting Ve Wong resolved to offer a dividend of NT$1 (US$0.03 at NT$32.8:US$1) per share, half in cash and half in stocks. This is Ve Wong's first dividend distribution in a decade.

Ve Wong registered NT$671 million (US$20.45 million) in after-tax earnings on sales of NT$3.342 billion (US$101.89 million) last year, up from earnings of only NT$10.42 million (US$317,680) in 2007. The company attributes last year's improvement to the revitalization of its core business operations and income from the sale of a new residential building in the Taipei district of Tianmu. In the first quarter of this year the company posted NT$280 million (US$8.53 million) in after-tax earnings, or NT$1.36 (US$0.04) per share.

Proceeds from the sale of the Tianmu building, Taketada said, allowed Ve Wong to retire most of its debt. This success has inspired the company to continue working to realize the value of its real-estate assets in the years to come. This, Taketada believes, will bring in a huge pool of fresh funds that can be used to develop new businesses.

At present, the company is preparing to boost the value of its real estate in Taipei City, Sanchong and Shulin in Taipei County, Hsinchu City in northern Taiwan, and Vietnam. The company anticipates the rebuilding of its three plants-one each in Taipei City, Sanchong, and Vietnam--into residential and office properties within the next three years.

Ve Wong reports that it has applied to the Taipei County Government for rezoning the site of its Sanchong plant for residential use. If the rezoning is completed by the middle of next year as scheduled, the company will build a 30-story residential building there within the next three years. Sales prospects for the proposed building are bright, because it will be close to a Carrefour wholesale market and only 500 meters from the Xinzhuang mass rapid transit station.

Investment in Bio-energy

In addition to boosting the value of its land assets, Ve Wong will also increase investment in the bioethanol business in Cambodia. The company believes that it will be able to begin mass-producing bioethanol there in the next three to five years at an annual capacity of 150,000 metric tons, with the bioethanol-which is widely used as an alternative fuel for vehicles-being sold on the local market and exported to Taiwan as well.

The company says it has already set up a bioethanol plant in Thailand and is planning another one in Cambodia because of the strong backing provided by an existing sugar mill that it operates. Soaring crude-oil prices are forcing many nations to develop alternative energies as a replacement for petroleum, Ve Wong notes, and bioethanol is now the most promising of the possible substitutes.

Taiwan currently consumes about10 million kiloliters of gasoline per year; 5% of that amount, or 500,000 kiloliters, is likely to be replaced by bioethanol in 2010. This leads Ve Wong to think that the market potential for bio-gasoline is huge, and that now is the right time to become involved in this new industry.

Sugarcane and cassava are the main raw materials used in making bioethanol, and Ve Wong has pinpointed appropriate sites in Thailand and Cambodia for growing them. An industry insider reports that the company already controls about 5,000 hectares in Thailand for the growing of sugarcane.