Homepage
PR Newswire
07-12-2010, 08:24 AM
Just a case of needing to raise funds?
Dec 7, 2010
HK dual listings 'to go on despite lack of success'
Firms see it as a way to raise valuations and liquidity, say analysts
By Yasmine Yahya
SINGAPORE firms that have also joined the Hong Kong exchange have not reaped significant success so far, but analysts believe the dual-listing trend will continue.
Local firms are keen on dual listings - Hong Kong and Taiwan are the main markets - as they can increase valuations and liquidity.
Z-Obee, China XLX Fertiliser, China New Town Development, Sound Global and Midas have made the move to Hong Kong, but the rewards have not materialised.
UOB Kay Hian executive director Chan Tuck Sing noted that most of these firms made stellar debuts, but after just a few days, their share prices began sinking. 'The tendency has been for the Hong Kong share prices of these firms to drift back down quite close to their prices on the Singapore market, or even lower,' he said.
Take, for example, China XLX. It debuted with a bang in Hong Kong last year, closing at HK$5.20, but the price has since plummeted and has not been able to return to that opening-day level.
China XLX's Hong Kong shares yesterday closed at HK$3.67, or 61.8 Singapore cents, near its close here of 60 cents.
Midas and Z-Obee have seen their Hong Kong share prices fall below their Singapore levels. Midas closed here at 93.5 cents yesterday, and HK$5.50, or about 92.6 Singapore cents, in Hong Kong. Z-Obee closed in Singapore at 33.5 cents, and HK$1.96, or about 33 Singapore cents, in Hong Kong.
The same pattern can be seen in the liquidity levels of dual-listed companies, said Mr Chan. After an initial frenzy, the turnover of the Hong Kong-listed shares tends to fall below that of the Singapore-traded stock.
But that has not deterred Singapore-listed China Animal Healthcare from pushing ahead with a Hong Kong dual listing. The China-based manufacturer of drugs and vaccines for livestock expects its shares to begin trading there on Dec 21.
Chief financial officer Edwin Goh said the firm is taking steps to boost the liquidity of its Hong Kong-listed shares. He told a briefing yesterday: 'There were measures put in place after discussions with (the Hong Kong exchange) to make sure that there was sufficient liquidity in the company (after the) listing.
'We're seriously hoping that some of our shareholders will move their shares to Hong Kong to increase liquidity, so our founder Wang Yan Gang, as a gesture, has taken the first step to transfer his entire stake to Hong Kong for a start.'
Mr Wang, who is also its chief executive, owns 53 per cent of China Animal.
It will probably not be the last of these dual listings, said NRA Capital executive chairman Kevin Scully.
'Right now there is a dichotomy in the Singapore market, with blue chips trading at 15 to 16 times price-to-earnings ratio, and mid-caps trading at half those multiples, around eight times price-to-earnings,' he said.
'So I think there will still be a number of companies that see dual listings as a way to accelerate their valuations, especially since this has worked for the firms that have gone before them.'
Mr Chan agreed, noting that although the share prices of those dual-listed firms typically drop after an initial rise, they still end up performing better than they would have if they had not pursued a dual listing.
'Take China New Town Development,' he said. 'Before talks of a dual listing, the shares were hovering at 10 to 11 cents apiece. After the dual listing was announced, they shot up to beyond 20 cents.
'Now they have drifted back down to around 13 cents. That's still about 30 per cent higher than it would have been without the dual listing. As a shareholder, your stake would have risen by 30 per cent in value, which is not bad at all.'
yasminey@sph.com.sg
--------------------------------------------------------------------------------
FIZZLING OUT
'The tendency has been for the Hong Kong share prices of these firms to drift back down quite close to their prices on the Singapore market, or even lower.'
UOB Kay Hian executive director Chan Tuck Sing
Dec 7, 2010
HK dual listings 'to go on despite lack of success'
Firms see it as a way to raise valuations and liquidity, say analysts
By Yasmine Yahya
SINGAPORE firms that have also joined the Hong Kong exchange have not reaped significant success so far, but analysts believe the dual-listing trend will continue.
Local firms are keen on dual listings - Hong Kong and Taiwan are the main markets - as they can increase valuations and liquidity.
Z-Obee, China XLX Fertiliser, China New Town Development, Sound Global and Midas have made the move to Hong Kong, but the rewards have not materialised.
UOB Kay Hian executive director Chan Tuck Sing noted that most of these firms made stellar debuts, but after just a few days, their share prices began sinking. 'The tendency has been for the Hong Kong share prices of these firms to drift back down quite close to their prices on the Singapore market, or even lower,' he said.
Take, for example, China XLX. It debuted with a bang in Hong Kong last year, closing at HK$5.20, but the price has since plummeted and has not been able to return to that opening-day level.
China XLX's Hong Kong shares yesterday closed at HK$3.67, or 61.8 Singapore cents, near its close here of 60 cents.
Midas and Z-Obee have seen their Hong Kong share prices fall below their Singapore levels. Midas closed here at 93.5 cents yesterday, and HK$5.50, or about 92.6 Singapore cents, in Hong Kong. Z-Obee closed in Singapore at 33.5 cents, and HK$1.96, or about 33 Singapore cents, in Hong Kong.
The same pattern can be seen in the liquidity levels of dual-listed companies, said Mr Chan. After an initial frenzy, the turnover of the Hong Kong-listed shares tends to fall below that of the Singapore-traded stock.
But that has not deterred Singapore-listed China Animal Healthcare from pushing ahead with a Hong Kong dual listing. The China-based manufacturer of drugs and vaccines for livestock expects its shares to begin trading there on Dec 21.
Chief financial officer Edwin Goh said the firm is taking steps to boost the liquidity of its Hong Kong-listed shares. He told a briefing yesterday: 'There were measures put in place after discussions with (the Hong Kong exchange) to make sure that there was sufficient liquidity in the company (after the) listing.
'We're seriously hoping that some of our shareholders will move their shares to Hong Kong to increase liquidity, so our founder Wang Yan Gang, as a gesture, has taken the first step to transfer his entire stake to Hong Kong for a start.'
Mr Wang, who is also its chief executive, owns 53 per cent of China Animal.
It will probably not be the last of these dual listings, said NRA Capital executive chairman Kevin Scully.
'Right now there is a dichotomy in the Singapore market, with blue chips trading at 15 to 16 times price-to-earnings ratio, and mid-caps trading at half those multiples, around eight times price-to-earnings,' he said.
'So I think there will still be a number of companies that see dual listings as a way to accelerate their valuations, especially since this has worked for the firms that have gone before them.'
Mr Chan agreed, noting that although the share prices of those dual-listed firms typically drop after an initial rise, they still end up performing better than they would have if they had not pursued a dual listing.
'Take China New Town Development,' he said. 'Before talks of a dual listing, the shares were hovering at 10 to 11 cents apiece. After the dual listing was announced, they shot up to beyond 20 cents.
'Now they have drifted back down to around 13 cents. That's still about 30 per cent higher than it would have been without the dual listing. As a shareholder, your stake would have risen by 30 per cent in value, which is not bad at all.'
yasminey@sph.com.sg
--------------------------------------------------------------------------------
FIZZLING OUT
'The tendency has been for the Hong Kong share prices of these firms to drift back down quite close to their prices on the Singapore market, or even lower.'
UOB Kay Hian executive director Chan Tuck Sing
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
