Yirendai to Repurchase ADSs for Up to $20 Million; Stock Jumps 5%
The stock of Yirendai jumped 5% on Monday after the peer-to-peer lender said it would repurchase up to $20 million of its shares.
(Updated with closing stock price)
Shares of Yirendai Ltd. (NYSE: YRD) gained more than 5 percent percent on Monday after the company announced it would repurchase up to $20 million in American depositary shares.
"We believe that our strong cash position enables us to simultaneously return value to shareholders through our regular semi-annual dividends and our new share repurchase program," the chief executive officer of the company, Yihan Fang, said in the announcement. Yirendai had $460 million in cash and restricted cash of March 31.
The stock of Yirendai, a large peer-to-peer lender in China, has been sliding since the company reported May 28 that its net income declined more than 20 percent in the first quarter compared with the same period last year. As its business continued to grow rapidly, the company said in its report, the cost of driving that growth increased. The company was also expecting potential future loan losses.
The day after Yirendai released its earnings, its stock lost 4 percent, then 11 percent on the following day. After a brief rise last week, the slide resumed with the company closing at $23.09 per share on Friday, just 28 cents above its 52-week low.
Today's announcement of the share repurchase drove Yirendai's stock up $1.19 per share to $24.28 per share.
In a statement today, Fang said the repurchase program emphasized the management's confidence in the long-term growth of its business.
"We will continue to invest in our business operations to drive long-term growth," she added.
The company said it would fund the repurchases out of its existing cash, or future cash from operating activities. The company gave no timetable for the repurchase program.
The stock of Yirendai has been trading down since the company released its first quarter report in May.
On Monday, the announcement of a share repurchase sent its stock up 5 percent to $24.28 per share intraday.
(Source: Thomson Reuters Eikon)