On their first day of trading China Development Financial Holding Corp (
"The price decline is no surprise because stock investors, in general, still question whether forming financial holding companies would actually boost the financial and banking sector's market share," Tiger Chen (陳裕誠), an analyst at Polaris Securities Co (寶來證券) said yesterday.
Frontman for the firm, Liu Tai-ying (
"With a capital stock of over NT$80 billion, our EPS [earnings per share] next year should be over NT$2," Liu told reporters at the holding company's founding ceremony yesterday, "Therefore, our future share price should be able to climb to somewhere between NT$50 and NT$60."
Aiming to become a 24-hour superbank, Liu said that, while the industrial bank has now transformed itself into a holding company with a one-for-one exchange of shares, the tough part -- mergers and acquisitions -- will take place next year.
"Since [our] growth may be slower next year, the share price may remain low," Liu said.
Liu also revealed he has bigger plans in mind for the company in the near future.
"The holding company's first goal is to become one of the top 300 banking giants in the world," the company's written statement said, adding that its net worth would be expanded to over NT$200 billion.
The statement added that the holding company is expected to acquire closely held First Taiwan Securities Inc (菁英證券) by May next year, hoping to expand its retail lending business.
Liu yesterday refused to reveal the anticipated share swap ratio for the deal but said it has already been decided.
In addition, he intimated that five commercial banks have approached the company about a merger, yet refused to identify any of them.
"Commercial banks are complicated, we need more time to evaluate them," Liu said, adding that the company would target one that has a non-performing loan ratio of 7 percent or less and a return on equity of more than 4 percent.
This narrows the field of potential candidates markedly, but Liu nevertheless refused to comment on which institutions China Development is pursuing.
He added that China Development plans to spend as much as NT$3 billion to buy back its shares at between NT$18 and NT$33 in the period between Dec. 31 and Jan. 31.
Meanwhile, Taiwan Holding Co (
The man receiving the application, Minister of Finance Yen Ching-chang (顏慶章) said that he expects to see the holding company, whose sole shareholder is the nation's central government, rank among the world's top 70 banks after the deal is completed.
The finance minster added that the application review process would be completed within one month.
Meanwhile, share prices of two other newly-formed holding companies also fell yesterday.
Hua Nan Financial Holding Co (
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