Experts call for more share buybacks

Experts urged 81 listed companies trading below their book values to follow the example of Baoshan Iron and Steel Co Ltd and buy back their own shares.

Baosteel said recently it will repurchase 5 billion yuan ($793.74 million) worth of its shares.

"For companies with a low price-to-book ratio, buying back shares is good for both the company and its shareholders if the company's capital flow is fine," said Li Xunlei, deputy general manager and chief economist at Haitong Securities. "There is an investment opportunity in companies that are financially sound but have a below one price-to-book ratio."

As of September 19, there were 82 listed companies, including Baosteel, trading below their book values in the Shenzhen and Shanghai stock markets. About 30 percent of them are blue-chip companies with a market capitalization of more than 10 billion yuan, such as Bank of Communications Ltd, Shanghai Pudong Development Bank Co Ltd, Baosteel, China Communications Construction Co Ltd, China Railway Group Ltd, according to information collected by the Shanghai Securities News.

The price to book ratio of Baosteel is as low as 0.71 at the moment.

On Aug 28, Baosteel said it will buy back about 1 billion shares at no more than 5 yuan per share. The buyback proposal was approved by 99.96 percent of shareholders at a meeting on Monday.

wang_ying@chinadaily.com.cn