China Steel shares close limit-up on buyback plan

GIVING BACK: The steelmaker said it would buy back 300 million shares before Dec. 17 to boost its stock price and transfer the shares to employees within three years

By Kevin Chen  /  STAFF REPORTER

Wed, Oct 08, 2008 - Page 11

Shares of China Steel Corp (中鋼) showed a big fluctuation in yesterday’s trading and closed limit-up after the nation’s largest and only integrated steelmaker announced it would buy back 300 million shares.

The Kaohsiung-based company’s board approved the buyback yesterday and agreed to implement the plan starting today through Dec. 7.

The company will pay between NT$21.18 and NT$52.67 per share, China Steel executive vice president and spokesman Chung Lo-min (鍾樂民) said in a stock exchange filing.

The shares bought on the open market will account for 2.49 percent of the company’s outstanding shares. The company will spend up to NT$98.4 billion (US$3 billion) on buying shares, it said.

The steelmaker plans to transfer the repurchased shares to employees within three years, it said.

Shares of China Steel have declined 30.46 percent this year to NT$30.25 as of yesterday.

On Monday, the stock fell 2.9 percent to NT$28.30, which was its lowest closing level since Sept. 26, 2006, Taiwan Stock Exchange tallies showed.

The buyback plan will be the third time the company has bought back shares since August 2001, when it announced it would repurchase 150 million shares on the open market. Its second buyback program was in November 2005.

Analysts forecast China Steel would see a record NT$22 billion net profit in the third quarter, up 16.8 percent from NT$18.84 billion in the second quarter.

But SinoPac Securities Corp (永豐金證券) said in a client note: “We are cautious on China Steel, as pricing pressure is more severe than we thought amid the weakening demand in the global economy.”

China Steel said in late August it would raise domestic steel prices by an average of 3.92 percent for the fourth quarter — its 11th consecutive quarterly change since the second quarter of 2006 — to reflect rising raw material costs and shipping fees.

China Steel is among several local stocks that have announced plans to buy back shares recently to prop up their slumping stock prices and increase the interests of shareholders.

High Tech Computer Corp (HTC, 宏達電), the world’s biggest maker of handsets running Microsoft Corp’s operating system, also announced a buyback plan yesterday to boost its share price.

HTC said in a stock exchange filing that it would repurchase 10 million shares, or 1.32 percent of total outstanding shares, on the open market from today to Dec. 7.

The company expects to spend up to NT$41.3 billion on the shares, or NT$400 to NT$500 per share, HTC chief financial officer and spokesperson Cheng Hui-ming (鄭慧明) said in the filing.

Separately, Capital Securities Corp (群益證券) and Taiwan Mobile Co (台灣大哥大) also announced plans to buy back shares over the same period. The companies said in stock exchange filings yesterday that they would eventually transfer the repurchased shares to their employees.

Shares of HTC closed 0.48 percent higher at NT$415.50 yesterday, while Capital Securities dropped 4.61 percent to NT$8.7. Taiwan Mobile shares were up 4.52 percent to NT$52.