An Apple supplier primarily based in Taiwan is battling an worldwide investor above its multibillion-greenback money pile in a circumstance that alerts burgeoning shareholder activism in the territory.
Catcher Technological innovation, which manufactures digital casings for Apple equipment created in China, is currently being challenged by Hong Kong-primarily based investment decision organization Argyle Road Administration to make improvements to its governance and return some of its $4.2bn of internet hard cash to shareholders, in accordance to people today common with the discussions.
Argyle retains about 1 for each cent of Catcher’s shares and is one of a quantity of its foreign institutional shareholders along with Franklin Templeton, Singapore’s GIC and Cathay Life Coverage. It has approached Catcher executives more than its considerations in a conference in Taiwan, one particular of the men and women reported.
Shareholder activism has grown far more bit by bit in Asia than in the US simply because of the dominance of relatives-controlled corporations, but new high-profile battles like in Hong Kong more than HSBC and Financial institution of East Asia, and in Japan more than Toshiba, have elevated its profile.
Worldwide trader appetite for Taiwan has improved in the latest several years, with international immediate financial investment increasing 275 for each cent to a 15-year substantial of $8bn in the initial 50 percent of 2022 owing to the nation’s huge industrial base and its status as a gateway to China.
Even so, the island’s tech-reliant stock sector been strike adhering to a provide-off by world resources and fears of a US recession.
Argyle has accused Catcher’s management of “hoarding cash” and applying it to assist a “bloated” govt framework, according to two folks with know-how of the problem. The firm has a market capitalisation of about $4bn on Taiwan’s stock exchange and is run by 3 brothers of the Hung spouse and children who sit on its board.
In 2020, Catcher bought two models from its Chinese division that equipped Apple with Apple iphone casings for $1.43bn to a lesser competitor, Lens Engineering, based mostly in the mainland province of Hunan. The divestment of 1 of its key income turbines came as Chinese firms pitched for new prospects to accessibility Apple’s coveted offer chain subsequent the China-US trade war.
Argyle argues that, even with the disposal, Catcher has paid a “low” dividend of NT$10-NT$12 per share for the previous 5 a long time that has totalled NT$42.95bn ($1.43bn) and reported it would retain that dividend amount for the up coming three decades.
About 15 for every cent of shares in the Tainan-based mostly company are owned by the Hung family, which include its chair Allen Hung, and close to 43 for each cent owned by international establishments.
Catcher explained it was “currently in the phase of business enterprise transformation” and was diversifying into locations including producing automotive areas and health-related technological innovation.
“The hard cash situation we stored is mostly for financial investment chances,” the corporation said. “We pay back at minimum 50 per cent of earnings as funds dividends. The funds dividends we’ve compensated just about every year more than the previous five yrs is practically equivalent to our paid out-in cash, basically over marketplace normal.”
In July, Taiwan prosecutors billed 14 people today including customers of Catcher’s research and development workforce with breach of rely on and having professional secrets and techniques for use overseas. Catcher claimed in a statement at the time that it “co-operates with the investigation and follows judicial techniques and judgments”.
Taiwan has stepped up endeavours in new many years to protect against the leak of delicate systems, this kind of as semiconductors, to the mainland. In 2021, Taipei moved to prohibit domestic tech businesses from advertising assets or subsidiaries to Chinese corporations.