Scrambling for a guaranteed return of more than NT$600,000 (US$18,379), investors have been rabidly subscribing to E-ton Solar Tech Co's (益通光能) initial public offering (IPO) over the past three days, making the solar cell maker the hottest pick on the market.
"Judging by the massive number of applications, I think only one out of every 3,000 prospective investors will receive shares," said Dave Chou (
As a prelude to making its debut on the GRETAI Stock Exchange on March 8, E-ton offered 265,000 shares to the public at NT$218 per share through a lot drawing system.
Each investor is restricted to just 1,000 shares. Shares of E-ton yesterday were trading at NT$830 on the Emerging Stock Market (興櫃市場), making it the champion of all public companies. In other words, winners of the draw will see an immediate return of NT$612,000 (ie, NT$830 minus NT$218 and then multiplied by 1,000).
The enticing deal has triggered an "E-ton storm" and lured a massive number of investors into applying since Monday, the first day for applications, Chou said.
As of yesterday, there were over 500,000 applications for the shares, and they were expected to pass the 700,000 mark by the end of today, the final day of application, Chou estimated. The draw will be held on Monday.
The competition for shares has also affected the local bourse over the past few days, as investors have directed their funds to the draw, Chou said.
"We did not expect our share price to shoot that high when we set the initial offer price," Chen Chao-chuan (陳昭全), a manager at the Tainan-based E-ton, said during a phone interview.
E-ton set the offer price at the end of last year by averaging its stock prices over the final quarter, Chen said.
But the company should be used to breaking records. Founded in 2001 by the Ji-ee Industry Co (基益集團), a manufacturer of automobile parts and electric vehicles, E-ton was listed on the Emerging Stock Market on March 3 last year at NT$60 per share, and skyrocketed by 175 percent to close at NT$248 the same day.
"E-ton may even surge to around NT$1,000 soon after it switches to the GRETAI market, making the stock a blue chip for long-term investment," Yuanta's Chou said.
Fueled by the promise of the solar power industry and hunger for renewable energy, E-ton has reported significant results recently. The company overtook bigger rival Motech Industries Inc (茂迪) in November last year, after a fire disrupted Motech's production.
E-ton also saw pre-tax income jump by 287 percent to NT$280 million, or NT$12.73 per share, last year, and may double its earnings per share (EPS) to NT$27 per share this year, Chou said.
E-ton's current production output is 25 megawatt (MW) per annum, up from 13MW last year, and will reach 60MW after it completes expansion of its capacity by the end of this year, E-ton's Chen said.
In the face of E-ton's IPO fanfare, however, Daniel Tseng (曾建詮), a manager at Fubon Securities Investment Services Co (富邦投顧), remained cautious, saying that the stock is overvalued and may lose its momentum after its debut.
The price-to-earnings ratio of the company is almost 31, which is considered too high, Tseng said. Besides, instead of holding the stock till the end of the year to receive NT$27,000 (1,000 x 27 EPS), the winners of the draw are likely to just sell the stock on the first day for a quick return of NT$600,000, Tseng said.
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