Baosteel soars on share buyback plan
By Richard Fu |
August 29, 2012, Wednesday
|
Print Edition
Print Edition
SHARES of Baoshan Iron and Steel Co surged in Shanghai yesterday after the company announced a 5 billion yuan (US$786 million) share buyback plan to bolster investor confidence.
Upon approval by shareholders, Baosteel will repurchase stocks worth up to 5 billion yuan at no more than 5 yuan apiece within 12 months, the company said in a filing with the Shanghai Stock Exchange late on Monday.
Baosteel jumped the maximum allowable 10 percent to close at 4.48 yuan yesterday.
The buyback will help increase the company's net assets and profit per share, but this is not the key to boosting share prices, according to Guotai Junan Securities analyst Li Hongliang.
"The key is the capital scale," Li wrote in a note. The plan could involve 23 percent of Baosteel's tradable shares and about 20 million yuan being spent by the company per trading day on average in 12 months, Li said. The daily trading volume of Baosteel shares has averaged only about 50 million yuan over the past 10 days.
The plan will put a floor of 4.50 yuan for Baosteel shares, he said.
Upon approval by shareholders, Baosteel will repurchase stocks worth up to 5 billion yuan at no more than 5 yuan apiece within 12 months, the company said in a filing with the Shanghai Stock Exchange late on Monday.
Baosteel jumped the maximum allowable 10 percent to close at 4.48 yuan yesterday.
The buyback will help increase the company's net assets and profit per share, but this is not the key to boosting share prices, according to Guotai Junan Securities analyst Li Hongliang.
"The key is the capital scale," Li wrote in a note. The plan could involve 23 percent of Baosteel's tradable shares and about 20 million yuan being spent by the company per trading day on average in 12 months, Li said. The daily trading volume of Baosteel shares has averaged only about 50 million yuan over the past 10 days.
The plan will put a floor of 4.50 yuan for Baosteel shares, he said.
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