Business Context and Reporting Period
This Form 6-K filing by Chunghwa Telecom Co., Ltd. covers corporate announcements and financial updates made between July 14, 2009, and August 10, 2009. The company operates as a telecommunications provider in Taiwan. The filing includes unaudited revenue results for July 2009 and the first seven months of the year, alongside a voluntary forecast for the third quarter of 2009.
Key Financial Metrics
Revenue and Profit (July 2009 and YTD)
- July 2009 Net Sales: NT$15.19 billion (down 1.5% year-over-year).
- July 2009 Operating Income: NT$4.77 billion.
- July 2009 Net Income: NT$3.73 billion.
- July 2009 EPS: NT$0.35 (Normalized EPS: NT$0.39).
- First 7 Months 2009 Net Sales: NT$105.56 billion (down 3.0% year-over-year).
- First 7 Months 2009 Operating Income: NT$33.27 billion.
- First 7 Months 2009 Net Income: NT$26.07 billion.
- First 7 Months 2009 EPS: NT$2.44 (Normalized EPS: NT$2.69).
Third Quarter 2009 Forecast
- Projected Revenue: NT$45.85 billion.
- Projected Gross Profit: NT$20.79 billion.
- Projected Operating Profit: NT$11.75 billion.
- Projected EPS: NT$0.93.
- Capital Expenditures (Acquisition of PP&E and Long-term Investments): NT$8.76 billion.
Dividend Distribution
- Cash Dividend: NT$3.83 per share.
- Stock Dividend: 10%.
- Record Date: August 9, 2009.
- Expected Distribution Date: September 2, 2009.
Other Metrics
- Loans to Others (as of July 2009): Corrected aggregate amount is NT$768.88 million.
Material Changes Versus Prior Period
- Revenue Decline: Net sales for July 2009 decreased by 1.5% compared to July 2008. For the first seven months of 2009, net sales decreased by 3.0% compared to the same period in 2008.
- Invoice Amounts: Total invoice amounts for July 2009 were down 3.17% year-over-year, while the first seven months showed a 5.88% decline in invoice amounts.
- Correction: The company corrected the reported aggregate amount of loans to others, reducing the figure from NT$784.70 million to NT$768.88 million.
Guidance, Outlook, and Risks
Management Commentary and Outlook
- 2009 Full Year Target: Management indicated a target EPS of beyond NT$4 for 2009 and a revenue target of NT$183.4 billion for the year. A five-year revenue target of NT$191.3 billion was also mentioned.
- Forecast Caveats: The Q3 2009 forecast is based on estimates and assumptions subject to significant uncertainties.
- Disaster Impact: The company explicitly stated that Typhoon Morakot had no impact on its finance or business operations.
Risks and Contingencies
- Forecast Uncertainty: The Q3 financial forecast is inherently subject to significant uncertainties and contingencies.
- Corporate Governance: A representative of the Ministry of Transportation and Communications was discharged from the board of directors on July 29, 2009, with a replacement to be appointed.
Investor Verification Checklist
- Verify the accuracy of the corrected loan amount to others (NT$768.88 million) in subsequent filings.
- Monitor the realization of the full-year 2009 EPS target of NT$4 against the Q3 forecast of NT$0.93 and YTD performance.
- Confirm the appointment of the new representative for the Ministry of Transportation and Communications on the board.
- Track the actual Q3 2009 results against the voluntary forecast of NT$45.85 billion in revenue.
- Review the impact of the 10% stock dividend on share count and diluted EPS calculations in future reports.