Inside The 1000 Ranks
A roller-coaster ride for some of Asia's biggest
By RICARDO SALUDO
But even the mighty Japanese felt the sting of 1998, when the Asian Economic Crisis was at its worst. The number of Japanese enterprises in the 1000 fell from 688 to 680. Other Crisis-hit countries lost places on the list: Malaysia, down to 12 companies (from 17); Indonesia, four companies (seven); Thailand, 10 (12); Singapore, 35 (38). Gainers included Taiwan, up to 27 (previously 20) and Australia, 73 (68). But South Korean companies also increased, to 70 from 64, as the country rebounded faster than those in Southeast Asia.
But the Crisis did take Korea's chaebol down a notch. The business groups' main trading companies like Samsung Co. (No. 22) and Daewoo Corp. (No. 24) are no longer the largest companies outside Japan. That distinction now goes to two Chinese state enterprises: China Petrochemical Corp. (No. 18, up from 27), with $34 billion in sales; and China National Petroleum Corp. (No. 19, up from 40), with $32.65 billion.
ASEAN also saw a change at the top: Caltex (No. 65) moved into first place. The second-largest company was Petronas, Malaysia's state oil giant (No. 81). It grossed $10.8 billion, helped by overseas operations and forward oil sales. The previous ASEAN leader, Indonesian petroleum company Pertamina, saw the dollar value of its sales shrivel with the rupiah's devaluation, to $8.58 billion from well above $20 billion. Its rank fell from No. 28 last year (adjusted for late data) to No. 112.
Where companies are better run and the business environment more favorable, it shows in the results. Taiwan companies netted 14% of all profits with just 1.54% of total sales. That's a jump from 9.3% of profits in last year's ranking. Leading the island's profit parade are near-monopolies like Taiwan Tobacco & Wine (No. 327), with $1.82 billion in profits, the fifth-largest; and Chunghwa Telecom (No. 171), with $1.5 billion net, the eighth-largest. Even more impressive is Hong Kong: 15.57% of profits, up from 9.5%, on 1.34% of sales, despite the territory's severe recession. Singapore, whose companies in the 1000 fell to 35 from 38, still garnered a slightly greater share of profits - 9.1% - on 1.9% of sales.
For its part, Japan accounted for less than a quarter of profits, despite hogging more than three-quarters of the 1000's total turnover and 72% of its combined assets. But the top three profit machines are Japanese. Strong revenues from cellphone and data transmission operations netted Nippon Telegraph & Telephone $4.6 billion. Following right behind NTT in the profit rankings are two Japanese automobile behemoths: Toyota Motor, with $2.72 billion net; and Honda Motor (No. 13), with $2.33 billion. NTT's cellphone affiliate NTT DoCoMo, with 60% of Japan's market, ranks No. 7 in profits, with $1.56 billion, and No. 29 in sales, up from No. 37. Investor bullishness on telecommunications more than doubled NTT DoCoMo's market capitalization to over $250 billion, the largest in Asia.
Telecommunications companies elsewhere also turned in megaprofits. Besides Taiwan's Chunghwa, there are: Telstra (No. 76) of Australia, No. 4 in earnings with $2.19 billion; Cable & Wireless HKT of Hong Kong (No. 248), with $1.47 billion net, the ninth-largest; and China Telecom (No. 326), a Hong Kong-listed cellphone operator in mainland China, with $833 million in profits on $3.2 billion turnover. Singapore Telecom ranks No. 359 in sales, but No. 15 on the bottom line, with $1.17 billion - a whopping 40% margin. But it is giving up its fixed-line monopoly. Pakistan Telecommunication (No. 980) joined the 1000 for the first time; sales topped $1 billion and profits reached $324 million.
Also enjoying fat profit margins are leading power companies outside Japan. With franchises that base their income on total assets, the two Hong Kong electricity suppliers, CLP Holdings (No. 336) and Hongkong Electric (No. 871), netted $1 billion and $637 million, respectively. The latter raked in a whopping 53.7% profit margin. Also nearing billion-dollar gains are Taiwan Power (No. 114), with $955 million (a 11.2% margin); and Korea Electric Power (No. 87), with $871 million. National Thermal Power of India (No. 299) earned $682 million (up 31%, with a 20% margin). But Malaysia's Tenaga Nasional (No. 360) lost $788 million, hit by currency losses.
Given the global PC boom, it's no surprise that computer-related companies are among the 1000's strong performers. Hewlett-Packard's Singapore printer maker (No. 170) netted $1.38 billion, up 70%, on an 18.4% increase in turnover. Also in the Lion City, Natsteel Electronics (No. 729) doubled its sales to $1.47 billion and broke into the 1000 for the first time. Three PC-related manufacturers in Taiwan also debuted in the ranking. Hon Hai Precision (No. 867) recorded a 68.5% sales rise to $1.19 billion; not far behind was Asustek Computer (No. 963), grossing $1.05 billion, up 64.7%. A third newcomer: notebook PC maker Compal (No. 885), with $1.17 billion in sales, up 48%.
Now for some bad news. Korean companies in the 1000 recorded a combined net loss of $4.9 billion, more than three times last year's $1.5-billion deficit. Among them is the biggest lossmaker in the ranking: Kia Motors, $4.74 billion in the red and now taken over by Hyundai Motor. Dong-Ah Construction (No. 555) lost big too: $866 million on $1.9 billion in turnover. Ssangyong Cement (No. 505) took huge asset writedowns and foreign-exchange hits; it hemorrhaged $765 million.
Japanese construction companies also took leading places in the loss table. Five of them had losses of half a billion dollars or more, led by Kajima Corp. (No. 60), with $1.52 billion. Three others lost over $200 million each. Johno Toshiyuki, an analyst with Nikko, Salomon Smith Barney, says Kajima has taken a big writedown in its land assets. "With demand recovering, it is on a recovery path," he predicts. But there is no easy way out, Johno adds. "There are too many construction companies in Japan." With similar overcapacity across the region, The Asiaweek 1000 will see more blood in the years ahead.