Yang Ming Marine Transport Corp (陽明海運) is not considering conducting a capital reduction in the short term, but might evaluate the possibility of retiring some stock repurchased from the market, company chairman Cheng Cheng-mount (鄭貞茂) told an annual shareholders’ conference in Keelung yesterday.
Cheng’s comment came after several minor shareholders suggested that Yang Ming Marine Transport should reduce its capital and return cash to shareholders, following the example of its local peer Evergreen Marine Corp (長榮海運).
The shareholders also complained about Yang Ming Marine Transport’s low payout ratio. The company proposed paying a cash dividend of NT$20 per share, a payout ratio of just 41 percent, lower than those of its local peers, despite it having cash and cash equivalents totaling more than NT$100 billion (US$3.41 billion).
Photo courtesy of Yang Ming Marine Transport Corp
State-owned companies such as China Steel Corp (中鋼) delivered a payout ratio of 77 percent, a shareholder said.
Yang Ming Marine Transport is not considering such an approach to boost shareholders’ returns during his tenure as chairman, but it would mull retiring some stocks, Cheng said.
Retiring bonds is usually considered a better approach to help prop up a company’s share price than buying back shares, as it reduces the chances of earnings dilution, he said.
Although the company’s profit grew for a second consecutive year last year, the shipping industry is prone to volatility, Cheng said.
It is conservative about setting dividend payments, he said, adding that the company wants to conserve earnings and capital for the investments, such as buying new or second-hand ships.
Yang Ming Marine Transport would not pursue a higher market share, but a better gross margin, he added.
The company would not irrationally expand its fleet, as the costs of news vessels and containers have been rising, Cheng said.
Shareholders yesterday approved the company’s plan to distribute a cash dividend of NT$20 per share. It is the first time that it has issued a cash dividend in about 10 years.
Shareholders also approved a proposal to set aside NT$2 billion for employees’ compensation.
Each employee would receive an average of NT$1.16 million, corporate data showed.
Overall, market demand for shipping is expected to be higher than supply, pushing up the freight rates, but rising global inflation and the development of the COVID-19 pandemic has clouded the visibility of the outlook, the company said.
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