TPK Holdings Co Ltd (宸鴻) shareholders yesterday approved a controversial 5 percent stock dividend issuance, backing management’s plan to allocate capital to boost capacity.
TPK, which supplies touch panels to Apple Inc, is one of only a few companies listed on the local stock market to issue relatively lower dividends, given its high net profits of NT$4.75 billion (US$165.1 million), or NT$23.03 per share, last year, more than double the NT$2.3 billion earned in 2009.
The decision on dividend issuance has raised debate among investors and analysts after the board gave the go-ahead to management’s proposal on April 18.
Some have said the company was being stingy with its dividend payments.
“We believe the company has a very good business opportunity because customers have lined up for our capacity even before our plants started operation,” TPK chairman Michael Chiang (江朝瑞) told shareholders.
Demand for its products has matched management’s commitment to pursuing a strong and long-term return on interest ratio.
“And we need cash to really expand capacity to seize the growing market opportunity,” he said.
TPK’s spending on new equipment would grow to NT$20 billion at least, from last year’s NT$10.7 billion.
Chiang said he was bullish about the touch panel market and he expected the industry to experience strong annual growth over the next three years to five years.
“The revolution of touch [screens] has just begun,” Chiang said. “We are seeing robust growth from Apple Inc’s [tablets] and from the non-Apple camp. It looks like the March 11 earthquake in Japan did not have a severe impact [on end demand].”
TPK plans to seek more businesses from tablet makers other than Apple, Chiang said.
In a show of support for management’s ambitions, not a single shareholder attending yesterday’s meeting supported the call — from a representative of institutional shareholder Securities and Futures Investors Protection Center — for an increase in the dividend payout ratio.
To finance equipment purchasing, TPK issued US$400 million in corporate bonds with a 32 percent higher conversion price at NT$1,071.84 per share, compared to the closing price of NT$812 on April 13, when the price was set.
Shareholders yesterday also gave approval to a new fundraising project to issue 20 million common shares in the form of depositary receipts.
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