HTC’s proposed cash dividend drops to 11-year low

FILING::The company said it would pay NT$976.33 million in cash bonuses to employees this year. Both the cash dividend and bonuses must be approved by shareholders

By Helen Ku  /  Staff reporter

Thu, May 02, 2013 - Page 13

Smartphone vendor HTC Corp (宏達電) yesterday said it plans to distribute a NT$2 cash dividend per share this year on earnings of NT$17.59 billion (US$596.47 million), or NT$20.17 per share, it made last year.

The figure represents the Taiwanese company’s lowest cash dividend since 2002, when it also paid NT$2 per share. Last year, the company distributed record high dividend of NT$40 on earnings per share of the NT$73.32 it made in 2011.

The payout ratio stood at 9.91 percent, compared with a 54.6 percent payout ratio last year.

The 95 percent dividend plunge came as HTC’s net profit plunged by 71.77 percent last year from NT$62.3 billion in 2011 amid falling market share and handset shipments.

In addition to a total of NT$1.66 billion to be distributed to shareholders this year, the company’s board also agreed to pay NT$976.33 million in cash bonuses to employees, according to a filing submitted to the Taiwan Stock Exchange yesterday.

The company gave employees NT$7.24 billion in cash bonuses last year.

The dividend payout and employee bonuses are subject to shareholders’ approval at the company’s annual general meeting on June 21.

Based on the company’s closing price of NT$301 in Taipei on Tuesday, HTC’s cash dividend yield is 0.66 percent, much lower than average deposit rates offered by most banks in Taiwan.

In the first quarter of this year, HTC posted NT$0.10 in earnings per share after missing its NT$50 billion to NT$60 billion sales target. It only posted NT$42.8 billion in consolidated sales, largely because of a component supply shortage.

However, the company said it plans to double spending on marketing its new flagship product, the HTC One, to regain ground lost to market leaders Samsung Electronics Co and Apple Inc.

CLSA Asia-Pacific Markets analyst Cheng Chao-kang (鄭兆剛) became the latest foreign brokerage analyst to upgrade HTC’s rating on positive reviews of the HTC One.

In a note on Tuesday, Chang said he had upgraded his rating on HTC’s shares to “buy” from “sell” and raised his price target for the stock to NT$360 from NT$150.

“We expect HTC to sell between 9 million and 10 million units of the new HTC One model, accounting for 34 percent of 28 million units of full-year shipments this year,” Cheng said. “The new HTC One’s favorable product reviews and cheaper pricing will help sustain its momentum into the second half of the year.”