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Taiwan sells 0.1% of China Steel shares

The government Wednesday sold 837,000 shares in the China Steel Corp (中鋼), one-tenth of 1 percent of the amount on offer, in the second day of a three-day auction.

The government, the biggest shareholder of China Steel, raised NT$20.3 million (US$589,000) from the sale at an average price of NT$24.20 a share. The government sold 5.9 million shares Tuesday, or 1 percent of the 570 million shares on offer, at an average price of NT$24.02.

Taiwan is selling stakes in state-controlled companies to plug a budget deficit estimated at NT$237.4 billion this year. A successful sale of China Steel would pave the way for the government to sell 10 percent more of the company to overseas investors in the form of global depositary receipts.

China Steel's shares have gained 27 percent since the beginning of this year. The government owns 39.92 percent of the company. They closed today at NT$24.20.

China Steel is paying a cash dividend of NT$1.40 a share and 0.15 share for every one share held. It may raise the cash portion of the dividend to more than NT$3 a share, according to a government statement yesterday.

The company's price-to-earnings ratio is estimated at six times, based on forecast earnings of NT$4 per share this year, the state-run Development Fund said in a statement.
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