Chinese shipbuilder Yangzijiang Shipbuilding Holdings, listed in both Singapore and Taiwan, announced on 30 April that it will terminate its listing in Taiwan.
The shipbuilder cited the small trading volume of its units, called Taiwan Depository Receipts, as well as the costs of staying listed in Taiwan.
Yangzijiang now holds 37.16 million TDRs, amounting to 0.48% of the company’s total tradable shares.
Yangzijiang promised to buy back 100% of its TDR at the price of TWD14.76 (USD0.48) per unit, and the buying back will last 50 days.
Despite the weak market sentiment, Yangzijiang has been rated the top shipbuilder in China as of the end of February 2015 and possesses healthy cash flow.
Yangzijiang posted a net profit CNY706.8 million (USD115.6 million) in the first quarter ended 31 March 2015, down by 12% y/y as compared to net profit of CNY799.2 million in 1Q14.
The termination of Yangzijiang’s TDR is another case of “bad money drives out good”, stated Wealth Publishing chairman Hsieh Chin-ho on his Facebook page yesterday, and was also indicative of the failure of TDRs.
Since 2008, Taiwan has made a concerted effort to internationalise its capital markets by encouraging foreign companies and Taiwanese businesses based overseas to list on the Taiwan Stock Exchange or the Gre-Tai Securities Market, which facilitates over-the-counter trading. This can be done through an initial public offering or a secondary listing via TDR.
Several companies listed in Hong Kong, Singapore and elsewhere Asia in have shown a strong interest in cross-listing on Taiwan’s stock exchange, attracted by Taiwan’s fund trading activities, high turnover and favorable price-to-earnings ratios, as well as a quick and simple listing process.