Baosteel buyback approaches completion

Baoshan Iron and Steel Co (Baosteel), China's largest listed steel maker by output, has completed nearly 80 percent of the 5-billion yuan ($811 million) share buyback program it initiated in September 2012, the company announced Monday in its latest update on the matter.

As of May 2, Baosteel had spent 3.85 billion yuan repurchasing 807 million of its own shares at prices ranging from 4.51 yuan to 5 yuan each, according to a filing the steel maker made to the Shanghai Stock Exchange Monday.

Word of the company's buyback plan first surfaced on August 27, when its shares were trading near a six-year low of 4.07 yuan. News reports on the scheme propelled Baosteel shares to the 10-percent limit the following day. Just prior to these developments, the China Securities Regulatory Commission (CSRC) had issued statements encouraging undervalued public companies to reclaim their shares as a way to revive the languishing equity market.

It was on September 21 that Baosteel officially kicked off the buyback, which made it the mainland's first blue-chip to conduct such a maneuver in close to four years. The steel maker's plan budgeted up to 5 billion yuan for the reacquisition of roughly 1 billion shares, or 5.7 percent of its outstanding stocks, over a one-year period in an effort to protect shareholders' interests and boost investor confidence, its announcements show.

"Based on what we can see, Baosteel delivered on its promise, which did offer support to its stock to a certain extent as its own transactions stabilized prices," a steel analyst at a Shanghai-based securities company, who preferred to remain nameless, remarked to the Global Times Monday.

Baosteel saw its shares gain 20.64 percent from 4.07 yuan at the end of August to 4.91 yuan as of the close of trading Monday; beating the Shanghai Composite Index, which increased just 8.54 percent to 2,231.17 points over the same period.

Despite these gains though, the steel producer's price-to-book (P/B) ratio continues to hover near 70 percent, a record low for Baosteel and an indication that its shares are still trading well short of their book value, according to a report issued last week from Eastern Securities.

"The relatively low P/B ratio points to ongoing pessimism among investors, most of whom are still skeptical about the slowdown seen across China's steel industry as well as the anemic conditions in the stock market," the anonymous analyst said.

Baosteel is just one of the mainland-listed companies which have offered buyback updates in recent days.

Shanghai-listed Anhui Jianghuai Automobile Co announced Saturday that it had repurchased 3.83 million of its own shares worth 19.74 million yuan at prices of no more than 5.20 yuan as of the end of April.