Has Formosa Plastics (1301) Revived? Analyzing the Stock Performance of the Four Treasures — Should You Buy the Dip Below 60 TWD?

After mid-August, the Taiwan stock market reached new highs before entering a period of high-level consolidation. On August 14, the index briefly touched 46,402 points intraday, but profit-taking selling pressure soon emerged. By yesterday (19th), the weighted index closed at 44,719 points, down 589 points on the day. Meanwhile, the stock prices of the 'Four Treasures' of the Formosa Plastics Group have shown clear divergence this year. Among them, Formosa Plastics (1301) first dropped to a low before rebounding, closing at 56.8 TWD on August 19. In response, investor Ashun posted on his Facebook fan page today (20th) under the title 'Has Formosa Plastics truly revived? Two years ago, I said the petrochemical industry was entering its twilight—should we reconsider now?' to analyze and review the changes at Formosa Plastics.

Has Formosa Plastics' stock price rebounded? What about its Q2 financial results?

Regarding Formosa Plastics' stock performance, from April this year, the stock hit a low of 51.9 TWD on April 20, then gradually recovered. On August 14, it briefly surged to 60.6 TWD, closing at 60 TWD—the recent high. However, it subsequently pulled back, closing at 56.8 TWD on August 19, down 3.8 TWD (about 6.3%) from the August 14 peak, though still 4.9 TWD (about 9.4%) higher than the April 20 low.

Ashun pointed out that two years ago, he stated that the traditional petrochemical industry was gradually entering its twilight. Formosa Plastics' stock had fallen from around 100 TWD to 30 TWD, with consecutive quarterly losses, until it rebounded to around 60 TWD in 2026. He cited Formosa Plastics' Q2 financial report as follows:

Gross margin: 12.65% Operating margin: 6.09% Net profit margin: 22.54% EPS: 1.67 TWD

Why did Formosa Plastics' stock price fall so sharply in recent years?

Ashun highlighted that the key reason is that the core business has finally started making money again. Why was Formosa Plastics so 'bad' in the past? He analyzed that many people first think of China. Once a major customer for Taiwan's petrochemical industry, China became a 'competitor' after aggressive overproduction, coupled with insufficient domestic demand, forcing excess capacity to be exported at low prices to capture market share. He further noted that Formosa also faced weak global petrochemical demand, the cancellation of some ECFA preferential treatments, exchange rate and tariff issues, and oversupply in the U.S. market. With weak demand, prices couldn't rise, and costs couldn't fall.

Why did it suddenly become profitable in Q2 2026?

Ashun stated that geopolitical factors pushing up petrochemical product prices were a major contributor. Combined with Formosa's low-cost inventory, selling prices rose faster than costs, widening the margin. In fact, sales volumes of main products did not significantly improve. Moreover, the EPS of 1.67 TWD was not entirely from core operations—investment income contributed significantly. Therefore, it's more like a 'margin revival' rather than an 'industry revival.' However, he also noted that Formosa Plastics is indeed changing, gradually shifting toward electronic-grade chemicals and semiconductor materials, attempting to move from 'high-volume, low-margin, easily undercut by China' to 'low-volume, high-margin, high-technology barrier' business models.

Has Formosa Plastics truly revived? What stock indicators should be watched?

So, in terms of stock price, has Formosa Plastics truly revived? Ashun used a river chart to show that the fair value finally started to turn upward in 2026, indicating the market has already begun pricing in a 'turnaround.' However, he does not believe Formosa has successfully transformed yet and suggests watching three key indicators. If Q2's performance is just a flash in the pan, it's merely a cyclical rebound. He concluded that while Formosa Plastics is indeed showing signs of a turnaround, 'revival' and 'successful transformation' are still two different things. The three observation indicators are:

Can the core business continue to make profits without inventory gains? Can the proportion of high-value products increase? Can ROE structurally recover?

Latest closing prices of the Formosa Four Treasures?

Regarding the stock prices of the Four Treasures, all closed lower on the 19th. Nan Ya (1303) closed at 187.5 TWD, down 12.5 TWD (-6.25%); Formosa Chemicals & Fibre (6505) closed at 70.2 TWD, down 2.6 TWD (-3.57%); Far Eastern New Century (1326) closed at 56.7 TWD, down 2.7 TWD (-4.55%); Formosa Plastics (1301) closed at 56.8 TWD, down 1.1 TWD (-1.90%).