Shares of Star Travel Corp (燦星國際旅行社), a leading travel agency, jumped on the GRETAI Securities Market, bolstered by investor optimism over its share-price performance.
However, the stock could encounter proft-taking pressure over the next few sessions after its rapid rise, analysts said.
The stock closed up more than 200 percent at NT$62, from its issue price of NT$21, with 4.81 million shares changing hands. It easily outpaced the GRETAI index, which ended down 0.76 percent at 116.49 points.
A newly listed stock is not subject to the maximum 7 percent limit in price gains or losses for its first five days of trading.
“Judging by the strong interest, I think the stock enjoyed a honeymoon period with investors, who were eager to see further upside in its share price,” Grand Cathay Securities (大華證券) analyst Mars Hsu (徐振家) said.
Star Travel issued 4.5 million new shares for the listing to raise about NT$94.5 million as working capital. It plans to use part of the funds to improve its financial structure.
“The NT$21 listing price was kind of fair in terms of its profitability, but after its strong showing, the stock now looks expensive,” Hsu said.
“I am afraid investors might rush to lock in profit over the next few trading sessions,” he said.
According to its prospectus, Star Travel returned to profit in 2010, posting a net income of NT$68.38 million, or earnings per share of NT$2.55, compared with a net loss of NT$29.8 million in 2009.
In the first nine months of last year, the company posted a net profit of NT$1.05 per share.
Hsu said he expected Star Travel to post earnings per share of NT$1.50 to NT$2 for last year and NT$2 for this year.