Taipei-Shares of vehicle financing company Hotai Finance Co. rose more than 80 percent Monday on the first day they were traded on the Taiwan Stock Exchange (TWSE) amid optimism over the company's profitability, dealers said.
The significant gains also reflected confidence in the support the company gets from its major shareholder -- Hotai Motor Co. -- Taiwan's largest car vendor and the local sales agent of Japan's Toyota Motor Corp., they said.
Shares of Hotai Finance rose 84.91 percent to close at NT$98.00 (US$3.21) from an issue price of NT$53, with 46.42 million shares changing hands on the TWSE on Monday, when the benchmark weighted index closed up 0.44 percent at 11,660.77.
Stocks normally cannot rise or fall by more than 10 percent in a trading session on Taiwan's markets, but newly listed stocks are not subject to that restriction the first five days they are traded.
Parent company Hotai Motor, which had a more than 30 percent share of Taiwan's car market in the first 11 months of 2019, added 0.99 percent to close at NT$615.00.
Hotai Finance opened up almost 55 percent and buying only accelerated to maintain the upward momentum to the end of the trading session, dealers said.
"Hotai Finance was a hit as investors were generally upbeat about the company's bottom line," Hua Nan Securities analyst Kevin Su said.
"With Hotai Motor as its major shareholder, Hotai Finance is quite likely to secure more business in the vehicle financing market."
Another of Hotai Finance's largest shareholders is Toyota Financial Service Corp.
According to Hotai Finance, its net profit for the first nine months of this year rose 32 percent from a year earlier to NT$1.82 billion.
Last week, Hotai Finance announced its initial public offering was 2.76 times oversubscribed, indicating that about NT$52 billion in funds were frozen in the market.
According to its website, Hotai Finance provides installment financing for new vehicles, commercial vehicles, used vehicles, and motorcycles as well as vehicle refinancing services.
It has also extended its financing business to corporate equipment leasing to offer customized corporate financial services.
Hotai Finance said the corporate equipment leasing business includes medical care equipment, machinery, construction facilities, and commercial vehicle leasing.
According to the Taipei Leasing Association, vehicle purchases based on installment payment financing accounted for more than 40 percent of total car purchases in Taiwan.
That is far lower than the 70-80 percent of cars bought using installment payment financing in more mature markets, indicating that there is plenty of room for the market to grow.
The company is also helped by its activities in China.
In 2007, it teamed up with affiliate Hotai Leasing to set up Hoyun International Lease Co. in Shanghai to provide vehicle, machinery and production equipment leasing services that allow local Chinese and Taiwanese companies to make better use of their funds.
Source: Focus Taiwan News Channel