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Attractive bonus plans give stocks a fillip   2009-06-01 - NLD, Bloomberg

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Investors at Kim Eng Vietnam Securities’ trading floor in Ho Chi Minh City  
Some listed firms planning to issue high rates of bonus shares this year have seen their share values rise despite the market’s recent correction.

 

Nui Ba Tay Ninh Cable Car Joint-Stock Co. surged the most in six weeks last Friday after saying it will double its registered capital by issuing bonus shares on a 1:1 ratio.

The company’s stock (TCT) rallied for a fifth consecutive day, rising VND7,000, or the maximum 5 percent, the biggest one-day gain since April 17, to VND148,000 on the Ho Chi Minh Stock Exchange. The benchmark VN-Index, which reached 425.17 points on Wednesday or an 80-percent rally from a four-year low on February 24, lost ground on Thursday and Friday, closing at 411.64.

Nui Ba Tay Ninh Cable will double its capital to VND32 billion (US$1.8 million) by offering almost 1.6 million bonus shares, it said in a filing to the exchange.

The Ho Chi Minh City-based company will give the shares for free to existing investors as a “bonus” on June 8, according to the statement. Stakeholders will get a bonus share for each share they hold in the company, it said. The new shares will be listed on the main bourse from July 15.

“Along with the increase in capital, the share bonus plan has also inspired investors to buy more since the company’s earnings per share after the new issuance will be around VND12,000, which is still pretty high compared with other stocks,” said Hoang Thach Lan, chief analyst at SME Securities.

At shipping firm Sea & Air Freight International’s annual meeting in late April, shareholders approved the company’s plan to increase its charter capital to VND100 billion from VND27.6 billion.

Under the plan, the HCMC-based company, known as SAFI, will issue 2.76 million bonus shares to existing shareholders at the 1:1 ratio, and another 2.76 million shares as dividend at the same rate. It will also sell 1.71 million shares to strategic partners.

Though the company has yet to announce the date the new shares will be offered, its stock (SFI) has attracted investors’ interest. It has increased 67 percent in May, compared with a 22- percent gain of the VN-Index.

Last Friday, the stock advanced 4.7 percent to close at VND112,000.

Bonus share issuance does not help increase the value of shareholders’ stake as the stock price is lowered in correlation with the rate of offering bonus shares, but it boosts liquidity, said Huy Nam, a HCMCbased independent equity analyst.



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