Shares of Catcher down on dividend proposal
May 1, 2014, 12:03 am TWN
TAIPEI--Shares of Catcher Technology Co. (可成科技), a major supplier of metal casings to Apple Inc., came under pressure Wednesday morning as investors were unhappy with the company's cash dividend proposal for 2013, dealers said.
Investors seized on the dividend proposal as a reason to sell the stock and pocket recent gains that had been driven by positive expectations for Catcher's 2014 earnings, they said.
As of 11:28 a.m., Catcher shares had lost 3.66 percent to NT$263.50 (US$8.72), with 10.30 million shares changing hands. The weighted index on the Taiwan Stock Exchange was down 0.46 percent at 8,831.39.
Low Payout Ratio
“Disappointed with the low payout ratio, investors simply rushed to cut their holdings in Catcher shares in a bid to pocket their recent gains in the stocks,” KGI Securities (凱基證券) analyst Phil Chu said. “Investors had expected more as Catcher is a profitable company.”
In a statement released Tuesday, Catcher said its board approved a proposal to pay a cash dividend of NT$5 per share for 2013. Compared with the company's earnings per share of NT$18.38, the payout ratio was a relatively low 27 percent.
The board also gave the company a green light to issue global depository receipts, representing up to 50 million common shares, to secure funds for future expansion.
“To my knowledge, Catcher is planning to spend about NT$7 billion in capital expenditure this year. The low dividend payout ratio showed the company wants to keep more funds on hand to expand its production capacity,” Chu said.
“But there are few concerns about Catcher's future growth, and the current selling reflected a relatively high valuation of the stock after recent strong buying,” Chu said.
Upbeat over Catcher's earnings outlook, investors had picked up the stock in recent sessions on expectations that Apple's new iPhone models, due out in the second half of the year, will continue to strengthen the Taiwanese supplier's bottom line. As of Tuesday, shares of Catcher had risen about 24 percent since the end of March, the TWSE statistics showed.
Net Profit down 14.1% in Q1
Catcher posted a net profit of NT$2.98 billion in the first quarter, down 14.1 percent from the fourth quarter. Its first quarter EPS stood at NT$3.97, compared with the previous quarter's NT$4.62.
“The slower first quarter earnings reflected slow season effects. But the market has high hopes that the company's growth momentum will pick up starting from the second quarter as its major clients, in particular Apple, will launch new products,” Chu said. Catcher has been dubbed one of the “Apple concept stocks.”