Ruentex Development Co (潤泰創新), a major supermarket operator and property developer, saw a major setback this week, as investors frustrated at the company’s decision not to offer a dividend payout this year dumped shares.
Shares closed down 2.33 percent to NT$39.8 yesterday, worse than the TAIEX’s 1 percent retreat before the market takes a four-day break for the Tomb Sweeping Day holiday.
The stock shed 15 percent this week, much deeper than the broader market’s 0.54 percent fall, Taiwan Stock Exchange data showed.
The slump came after the Taipei-based company on Monday said that due to losses in affiliated ventures, Ruentex would not distribute a dividend this year, though it earned NT$7.999 billion (US$247 million) in net profit last year, up 21.8 percent year-on-year, with earnings per share of NT$6.46.
The decision — the first such decision in 10 years — stemmed from the company’s need to recognize special reserves of NT$7.142 billion for affiliated Nan Shan Life Insurance Co’s (南山人壽) unrealized losses valued at NT$30 billion, the company said in a stock exchange filing.
Ruentex indirectly owns a 25 percent stake in the insurer.
Weaker returns from its investment in Sun Art Retail Group (高鑫零售), China’s second-largest hypermarket operator, also warranted the conservative dividend policy, Ruentex said.
Sun Art earnings fell 15 percent last year from 2014 as retailers in China took a hit from an economic slowdown, Yuanta Investment Consulting Co (元大投顧) analyst Peggy Shih (施姵帆) said.
Feiniu.com (飛牛網), another affiliated e-commerce platform, fared worse by incurring losses of between 300 million and 400 million yuan last year, Shih said.
While Ruentex might see revenue contributions from different projects mostly in the second half of the year, prospects for these affiliated ventures remain grim this year, as Nan Shan Life faces investment risks of market volatility, Sun Art encounters growing competition from Chinese online peers and a business recovery in Feiniu.com is still slow, Shih said.
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