Asia Technology, which produces and sells agricultural machinery such as tractors and combines, has initiated a share buyback. As the newly established government emphasizes the importance of public company stock buybacks to revitalize the stock market, the company's announcement of its buyback policy has resulted in a rise in its stock price.
However, compared to the stock price increase of the company that recently decided on a buyback, which reached the price limit, the rise in Asia Technology's stock price has been deemed somewhat disappointing. Although there was a significant increase in the early trading hours, the uptrend soon slowed to around 7%. The stock price moved around 2,400 won on the morning of the 12th, which is less than the price per share announced for the buyback (2,900 won).
Industry observers note that while Asia Technology has attempted several self-stock buybacks, the fact that the quantity ultimately reverted to the major shareholder means that these buybacks are not fully perceived as positive news.
The company also stated that it does not plan to cancel all of the self-acquired shares this time, suggesting that its buyback may not be particularly attractive to individual investors.
Asia Technology announced that it plans to acquire 1 million shares for 2.9 billion won. The company explained that the purpose of this buyback is to enhance shareholder value. The buyback report states, "As the number of outstanding shares decreases by the amount of shares the company purchases, the per-share value, which includes the net asset value per share, is expected to rise and positively affect the stock price, which has been sluggish for a long time." However, there was no mention of a stock cancellation plan.
Rather, investors' attention focused on the plans to use the acquired treasury shares. The company stated, "There are no immediate plans to agree to transfer the treasury shares acquired through the buyback to a third party," but added that "some of the acquired treasury shares could be used for disposal through strategic partnerships with equity investors."
The treasury shares acquired by the company are restricted from voting rights under the Commercial Act. However, if the treasury shares are sold to friendly forces, the voting rights can be restored. Although the scale of the treasury shares being acquired this time is not large, there is a significant probability that they will not be canceled and will end up with other investors. The relatively small increase in stock price after announcing the buyback is interpreted as being influenced by the company's policy.
Asia Technology has previously engaged in several buybacks. Starting in 2014, it acquired treasury shares through two buybacks in 2017. CEO Kim Shin-gil bought treasury shares acquired through the buyback, increasing his stake to 25.5%, while the largest shareholder's stake, including related parties, remains stable at 35.1%.
Asia Technology was listed on the KOSDAQ market in January 2010 with an initial public offering price of 4,100 won, but over the past 15 years, its stock price has consistently remained below the offering price.