Howarm United Industries Co (和旺) shares yesterday closed down by its daily limit for the fourth consecutive day, as settlement default news continued to plague the Taipei-based land developer, although the firm is maintaining normal operations and has plans for NT$4 billion (US$128.5 million) worth of new projects.
The share price plunge came at variance with the benchmark TAIEX’s 1.92 percent rally yesterday. Data from the Taiwan Stock Exchange showed that the stock had surged to NT$72 in February, but headed south last month.
Howarm has dropped 22 percent this week and 44.2 percent so far this year.
Photo: CNA
“The company does not like the price fall, but there is little it can do to reverse the market,” Howarm spokesman George Tsai (蔡中和) said by telephone.
Howarm has no intention of buying back its own stock and is trying to learn the causes for settlement defaults linked to its shares from the previous two days, Tsai said.
Howarm is listed on the Taipei Exchange (TPEx, 櫃檯買賣中心), the nation’s over-the-counter bourse. On Tuesday and Wednesday, more than NT$160 million of trades failed to be settled, driving officials from the TPEx to visit the land developer and affected securities houses.
The TPEx declined to comment on the meetings, except to say the default appeared an isolated incident that has been brought under control and it would likely disclose its investigation results on Monday.
Tsai said the company is maintaining normal operations, despite the defaults and the exchange regulator’s probe, and has turned related documents over to the exchange as required.
Howarm plans to launch NT$4 billion worth of new projects in Taipei and New Taipei City this year, compared with NT$1.5 billion last year, Tsai said.
“We don’t expect quick sales, given the weak market confidence, but we remain positive about demand for fair-priced houses in good locations,” Tsai said.
The company plans to build small mid-priced apartments in Taipei’s Zhongshan District (中山) and Tatung District (大同), as well as New Taipei City’s Sijhih District (汐止).
The company posted NT$1.02 billion in revenue last quarter, representing a 20.54 percent increase from the same period last year, aided by the sale of 100 ping (330m2) of land in Zhongshan District, according to the company’s stock exchange filing. Net income was NT$226 million last year, or NT$1.75 per share, the company said.
The TPEx said brokerages and investors might have difficulty recovering or selling Howarm shares in the short term, given the stock’s sluggish trading.
While there are five brokerages affected by the settlement defaults: MasterLink Securities Corp (元富證券), Mega Securities Co (兆豐證券), Horizon Securities (宏遠證券), Capital Securities Co (群益證券) and Waterland Securities Co (國票證券), the financial sub-index yesterday closed up 4.65 percent on the local bourse, driven by those financial stocks that have large securities operations.
China Development Financial Holding Co, which owns KGI Securities Co (凱基證券), saw its shares rise by the maximum daily 7 percent to close at NT$11.80, while Fubon Financial Holding Co (富邦金控), which operates Fubon Securities Co (富邦證券), saw its shares also move up by the maximum 7 percent, to NT$61.70.
Yuanta Financial Holding Co (元大金控), owner of the nation’s biggest brokerage, Yuanta Securities Co (元大證券), gained 6.50 percent to close at NT$17.20.
Shares of listed brokerages such as President Securities (統一證券), Capital Securities Co, Horizon Securities and Concord Securities (康和證券) increased by between 4 percent and 5 percent.
Analysts said buying in financial shares reflected investors’ hopes that Taipei and Shanghai would launch a platform to trade stocks on both exchanges in the near future, which would benefit security brokerages in particular.
With the strong buying of financial stocks, which accounted for more than 20 percent of yesterday’s total turnover, the TAIEX climbed to its highest level in seven-and-a-half years, closing up 184.49 points, or 1.92 percent, at 9,797.49.
Additional reporting by CNA
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