Taiwan High Speed Rail shares jump on main board debut

Shares of Taiwan High Speed Rail Corp. (THSRC, ????) moved sharply higher Thursday, the first day the company was listed on the local main board, as investors rushed to park their funds in the defensive stock, dealers said.

While the broader market suffered downward pressure, led by the bellwether electronics sector, THSRC shares were highlighted in the market due to their attractive listing price, amid hopes that the company, the sole high speed rail operator in Taiwan, will continue to generate stable revenue, the dealers said.

As of 12:09 p.m., shares of THSRC had gained 46.53 percent from the listing price of NT$15.15 (US$0.48) to NT$22.20, with 51.92 million shares changing hands on the Taiwan Stock Exchange, where the weighted index fell 0.49 percent to 9,316.40 points.

Since the stock is newly listed, it is not confined to a 10 percent daily upward or downward limit for the first five trading sessions after its debut on the local equity market.

THSRC shares got tremendous buying to push up its price above the NT$20 mark soon after the local main board opened Thursday, and the momentum continued throughout the trading session.

"The broader market is moving in consolidation mode with the high-tech sector weakening, so it was no surprise that investors tried to park their funds into a stock like THSRC, to enjoy a honeymoon period with the new listing," Hua Nan Securities analyst Kevin Su said. "More importantly, THSRC is a defensive stock, as it has become profitable and is generating stable sales."

According to underwriter Fubon Securities, THSRC posted NT$20.05 billion in sales and NT$0.4 in earnings per share for the first half of this year. The underwriter noted that operations for the first half of this year were better than last year, but did not give any comparison figures.

"The listing price was attractive to many investors, as the stock hit an intraday high of NT$21.90 on the emerging market in mid-September," Su said. In Taiwan, a stock is required to have a listing on the emerging market for no less than six months before it can go to the main board or the over-the-counter market.

After seven years of construction, THSRC became operational on Jan. 5, 2007, shortening the travel time from Taipei to Kaohsiung to about 1.5 hours. The number of passengers it carries every day on average rose to 153,000 in 2016 from 43,000 recorded in 2007. As of the end of September 2016, the accumulated passenger number totaled 389 million.

In 2015, THSRC began financial restructuring in a bid to become profitable. In that year, the company took a cut in its paid-in capital by 60 percent, or NT$39.1 billion, to make up its losses, and then raised its capital size by NT$30 billion, with the government's stake in the company rising to 63.9 percent from 22.1 percent.

Due to the financial restructuring, the Ministry of Transportation and Communications (MOTC) agreed to extend THSRC's concession period to 70 years from 35, which has laid a foundation for the company to make a profit down the road.

Source: Focus Taiwan News Channel