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To: DJBEINO who wrote (7201)	3/30/2000 12:47:00 PM
From: DJBEINO	Respond to of 9582

Dividend time carries a new meaning in Taiwan Tis the season for stock dividend payouts -- or Taiwan's version of share splits. Over the next two months, the corporate boards of many Taiwanese companies -- such as CD-R maker Ritek (‰„¬w) -- will hand out additional shares as a reward to investors. But while dividends as most investors know them are cash payments from a company's earnings, in Taiwan they also come in the form of additional shares. And because the bonus shares are dilutive, in theory they don't boost the value of an investor's portfolio. As one floor broker at a local securities house put it, "If you slice a pizza in two or you slice a pizza in four, you still have one pizza." Take this scenario for example: An owner of 1,000 shares with a 50 percent dividend payout ratio is allocated 500 additional shares. If the stock trades at NT$150, the price is lowered to NT$100 to reflect the additional outstanding shares. But while the investor's shareholding has increased from 1,000 to 1,500, the total value of the holdings remain at NT$150,000. Or at least on paper, that's the way it should work. Historically, however, investors have bid up companies that issue high stock dividend payouts. "Retail investors do tend to run them up. It's kind of hard to understand why they do that," said Samuel Webster, director of research at Credit Suisse First Boston in Taiwan. "In terms of owning a percentage of the earnings stream, you're no better off." Part of the answer is that share splits mean a lower stock price, which in turns makes the shares easier to trade. "A lower absolute share price can attract retail investors," said Neal Stovicek, head of equity research at National Securities Corp. Because stocks trade in 1,000 share lots, a retail investor wanting to get into Ritek could be turned off by the NT$267,000 entry barrier. Ritek ended at NT$267 yesterday, up NT$15, or 5.95 percent. Stock dividend payouts lower that barrier for the nation's smaller investors and help to relieve pent up demand. There's also the scarcity factor, said Jovi Chen, equities analyst at China Securities. Typically, Chen said, there's a two-month lag between when a company's share price is reduced as the result of a dividend payout and the time when the additional shares are actually allocated to an investor's account. While the lower share price makes a company more attractive to retail investors, the additional shares aren't in the market yet to accommodate the increased demand. "You'll notice that when those shares are brought to market there'll be a sell-off," Chen said. Another reason why retail investors bid up companies with high dividend stock payouts is the psychological factor. Retail investors tend to think that a share -- once split -- will rise to its previous level in absolute terms. Still, while some of the enthusiasm for high-dividend stocks is not always driven by fundamentals, analysts note that they do tend to be high-growth technology companies, and that makes them worth owning. "We're looking at over NT$300" as price target for Ritek, said Chen, who favors the company for its high margins and low forward-looking price-earnings ratio. Chen said he expected Ritek pay out a 50 percent stock dividend. He also anticipates high-dividend stock plays Systex (§‰ú~) and Stark Technology will reach NT$540 and NT$600, respectively. Stovicek said he favors Asustek Computer for its high earnings growth rate and its leadership in the motherboard market. Asustek is expected to issue a 36 percent stock dividend, along with NT$2.4 per share in cash.