Dividend proposal prompts run on Asustek shares

Staff writer with CNA

Sat, Mar 29, 2014 - Page 14

Asustek Computer Inc (華碩電腦) shares rose to a more than one-month high yesterday as buying was sparked by the personal computer vendor’s proposal for a generous cash dividend payout, dealers said.

Asustek stock price surged 2.04 percent to NT$300 yesterday, outperforming the TAIEX, which dropped 0.06 percent.

“Asustek’s dividend proposal comes at a time of maturity in the PC industry, so there is no need for the company to keep large amounts of cash on hand for future big investments,” Hua Nan Securities (華南永昌證券) analyst Kevin Su (蘇俊宏) said.

As of the end of December last year, Asustek the — world’s fifth-largest PC brand — was sitting on NT$62.17 billion (US$2 billion) in cash and cash equivalents, up from NT$40.83 billion at the end of September.

“The proposed fat dividend payout spurred many investors to pick up the stock soon after the local bourse opened as the dividend yield is much better than bank deposit rates,” Su said.

At a board meeting, Asustek’s directors approved the proposed NT$19.5 in cash dividend for last year, up from NT$19 for 2012. The dividend for last year, if approved by Asustek’s shareholders at an annual general meeting on June 17, will be the highest in the company’s history.

Based on Asustek’s earnings per share (EPS) of NT$28.9 last year, the proposed dividend represents a payout ratio of 67.5 percent, higher than the 63.8 percent recorded in 2012.

Based on the closing price of NT$294 posted by Asustek on Thursday, the company’s dividend yield is estimated to be about 6.6 percent, compared with an annual interest rate of 1.35 to 1.39 percent on time deposits with banks.

“However, Asustek’s shares encountered stiff technical resistance at about NT$300. It was no surprise that the stock’s gains were capped during the trading session,” Su said.

The stock’s movement broadly mimicked the overall market, which moved off an early high, he said.

Su said market sentiment remained cautious about global PC demand, which has been squeezed by the rising popularity of mobile devices such as smartphones and tablet computers, and Asustek is no exception.

Last year, Asustek’s consolidated sales totaled NT$421.38 billion, up 2 percent from a year earlier, while its net profit fell 4 percent year-on-year to NT$21.45 billion with its EPS at NT$28.9, down by an annual 3 percent.

Last year, notebook computers accounted for 59 percent of Asustek’s total revenue, tablets made up 18 percent and motherboards represented 13 percent.