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China Steel share sale branded a success

The government yesterday sold some 330 million shares of the state-run China Steel Corp (中鋼) during the last day of its three-day auction, the Taiwan Stock Exchange Corp said in a statement.

The three-day sale attracted bids by investors for about 336.8 million shares, or 59.9 percent of the amount the government aimed to unload, the statement said.

After selling just 1.2 percent of the stake during the first two days due to a comparatively high floor price, the government yesterday offered the shares at NT$24.20 as a minimum price, a 1.6 percent discount on their closing price of NT24.60 on the TAIEX.

The average price of shares bid yesterday was NT$24.33.

In the course of the three-day sale, the government, which owns a 40 percent stake in the nation's largest steel maker, pocketed NT$8.19 billion.

While there are still 240 million shares of China Steel left untapped in the auction, market watchers said the brisk sale on the last day showed that China Steel is still a good investment target.

"It was quite a successful auction since investors were willing to buy the stake with a price almost the same as the market price," said Stanley Yeh (葉德霖), an analyst at Yuanta Core Pacific Securities Co (元大京華證券). "Usually, the price offered in an auction should be a 5 to 10 percent discount off the market price."

A major reason for the optimism is the rejuvenation of the steel market, Yeh said. China Steel has forecast to generate NT$36.5 billion profits this year, a record high for the company, Yeh added.

China Steel is currently paying a cash dividend of NT$1.4 a share and NT$0.15 a share for every one share held. It may raise the cash portion of the dividend to more than NT$3 a share next year, a government statement said.
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