Taiwan Fertilizer's (
The news comes almost a week after 7 top executives were sacked in cinnection with the alleged misuse of a multimillion dollar fund.
The company's share price soared by the seven percent limit to NT$55 yesterday, after tumbling by the seven percent limit for four straight sessions.
"The high dividend has made Taifertilizer's price-earnings ratio so low that the stock still has great potential to rise," said an analyst at a securities house. "That's why it soared to the seven percent limit."
The prediction was supported by an analyst from another securities house. Although Taifertilizer's share price may fall again before the scandal dies down, said the analyst, the company's share price still has potential to rise in the long term. "Taifertilizer's fundamentals are good -- the company has many assets and a sound financial structure," he said.
At its board meeting on Aug. 26, two days before the company began its final share auction, Taifertilizer had decided to pay a dividend of NT$2.70 per share.
Industry sources suspect that the Commission of National Corporations (CNC) decided to pay a higher dividend in an attempt to boost the company's share price.
However, according to Cheng Wen-ching (
Last Tuesday, the CNC acknowledged that several Taiwan Fertilizer's executives had allegedly misused a NT$4 billion fund. The commission subsequently dismissed the company's chairman, four other board members and two supervisors.
Since then, the company's share price has plummeted from NT$67.50 per share to a low of NT$51.50 per share last Saturday.
The CNC still has control of the company, despite its Taifertilizer's privatization, because the MOEA remains the major shareholder with its 40 percent stake. Taifertilizer completed the sale of 131.773 million shares (at an average price of NT$52.06 per share) in its final share auction on Sept. 1, after two failed attempts.
Also yesterday, Chiu Mao-Ying (
According to Chiu, the new board will make a careful assessment on the future of the four subsidiaries to whom Taifertilizer lent money to buy its own stock.
CNC's vice chairman said last week that the MOEA may close all or some of the four subsidiaries, unless Taifertilizer can explain if the four were set up for any other reason than to buy the stock.
But Chiu said the four will not have to sell their Taifertilizer stock immediately.
"Any decisions we make in the future will be based on the benefit to the company and investors," said the chairman. "The four subsidiaries will not sell their stock in Taifertilizer now because they purchased that stock at an average price of NT$62 per share," he said. "The four companies will lose a great deal of money if they sell them now."
With the Taifertilizer scandal snowballing into a political issue, more and more links to political and business bigwigs have been exposed.
Last week, Liu Sung-pan (劉松藩), a legislator and the ex-president of Legislative Yuan, said that KMT business czar Liu Tai-ying's (
According to local media, that "friend" is Li Ming-zhi (
Wang Jin-Pyng (
Li has also bought a 20 percent stake in Taifertilizer, according to industry sources, and is reported to be interested in being elected as a board member.
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