Sat, Jun 14, 2014 - Page 14 News List

Buyback plans prompt share movement

INVESTORS APPROVE:Rich Development Co and Shinkong Synthetic Fibers saw trading gains after they released proposals to buy shares through August

By Kevin Chen  /  Staff reporter

Shares in Rich Development Co (力麒建設) and Shinkong Synthetic Fibers Corp (新光合纖) outperformed the local bourse yesterday as investors felt positive about the companies’ latest share buyback proposals.

Rich Development shares rose 1.04 percent to NT$14.6, while Shinkong Synthetic shares advanced 2.94 percent to NT$10.5.

On Thursday, Rich Development said its board had approved a plan to buy back as many as 5 million shares in the open market from yesterday until August 11.

The size of the share buyback account equals 0.66 percent of its total shares, the Taipei-based developer said in a statement after the local stock market closed on Thursday.

The latest proposal is likely to cost the company from NT$50.6 million to NT$109.25 million (US$1.7 million to US$3.6 million), as Rich Development plans to repurchase the shares at prices between NT$10.12 and NT$21.85 per share.

The company said the purpose of the buyback was to maintain the company’s credibility and safeguard shareholders’ interests, but Yuanta Securities Co (元大證券) analyst Chen Yen-liang (陳彥良) said the move indicates part of the company’s business reform after its water resource unit gained support from Beijing Enterprise Group (北控集團).

Last month, Rich Development inked a deal to sell a 30 percent stake in a subsidiary to China’s Beijing Enterprise for NT$1.49 billion, as it wants to tap wastewater treatment markets in China.

“Controlling the share base is the key to the company’s business reform in 2014,” Chen said yesterday, adding that the company might carry out another buyback later this year.

In addition, he said it is “perfect timing” for a share buyback, which could boost the company’s return on equity, earnings per share and book value per share as negative sentiment on construction stocks remains.

Meanwhile, Shinkong Synthetic plans to buy back 36 million common shares at NT$7.5 to NT$12.0 per share from yesterday through August 12.

The size of the purchase represents 2.04 percent of the company’s outstanding shares, and Shinkong Synthetic would spend up to NT$432 million on the buyback, the company said on Thursday.

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