Long overshadowed by the local technology sector, Taiwan's food and beverage manufacturers are at last making a comeback on investors' most-wanted lists as solid, defensive stocks. One industry player receiving more attention that most is Wei Chuan Food Corporation, a key domestic supplier of milk products and soy sauce.
More precisely it is Wei Chuan's partial acquisition by unlisted Taiwanese company Ting Hsin that excites the analysts. Ting Hsin, which acquired one third of Wei Chuan and with it management control, dominates mainland China's fast-growing instant-noodle market. "Ting Hsin is adopting a strategy of taking good Taiwanese brands into the mainland through its extensive distribution network in China," says Peter Kurz, strategist and senior analyst at Merrill Lynch in Taipei.
With over a billion mouths to feed, mainland China is an obvious market for Taiwan's food industry. With that in mind, analysts see considerable upside potential in the Wei Chuan/Ting Hsin tie-up. The more so because Ting Hsin has a much more developed grip on the China market than most of its rivals.
Market watchers also like Wei Chuan's new management style. "The company was stodgy and under-managed in the past," says Kurz.