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  • Home > News > Details
    Baosteel's buyback plan likely to be approved
    2012-09-17

    Shareholders in Baoshan Iron and Steel Co Ltd plan to discuss various proposals today, including one calling for the company to buy back 5 billion yuan ($791.1 million) worth of its shares, sources said.

    The company plans to buy back 1 billion of its outstanding shares at not more than 5 yuan apiece, according to a filing to the Shanghai Stock Exchange that was dated August 28.

    "There should be no reason why the proposal wouldn't get the green light at the shareholders' meeting," Liu Junqing, a steel industry analyst from Shanxi Securities Co Ltd, was quoted as saying by Xinhuanet.

    The same day the steelmaker's plan was announced, the company, commonly known as Baosteel, saw its shares rise by the upper daily limit. From then until the closing of the market on Friday, the stock's price has increased by 13.8 percent.

    According to the plan, the 1 billion shares that are to be repurchased constitute about 5.7 percent of the Shanghai-listed steelmaker's capital stock, and the purchase is meant to boost Baosteel's stock price amid the bearish sentiment in the market for A shares, which are denominated in renminbi and traded on mainland exchanges.

    Because the purchase price has been set at a maximum of 5 yuan apiece, which is higher than the stock's current price of about 4.6 yuan, analysts have said investors can make a roughly 8 percent profit if they decide to invest now in Baosteel shares.

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