2009年12月9日星期三

China XLX Jumps in Hong Kong

http://www.abouthk.com/index.php?option=com_content&view=article&id=926:china-xlx-jumps-in-hong-kong&catid=1:news&Itemid=46

Bloomberg

China XLX Jumps in Hong KongChina XLX Fertiliser Ltd. shares rose 82 percent in their first day of trading in Hong Kong yesterday compared with the company’s close the previous day in Singapore, and an executive said not enough shares were on the market.

Stephan Yao, director of investor relations at China XLX, said there was “an insufficient quantity” of the company’s shares available to Hong Kong investors. “It takes time for the company’s shares to be transferred from Singapore to Hong Kong,” Yao said by phone yesterday. He expects trading conditions to “return to normal” within two weeks.

China XLX was listed by introduction, meaning the shares were moved to the Hong Kong market from another exchange without being initially sold in Hong Kong. China XLX’s debut was the first such listing in Hong Kong since Asian Citrus Holdings Ltd.’s last month, which prompted Hong Kong Exchanges & Clearing Ltd. to tighten disclosure rules for candidates.

China XLX’s explanation of the situation “suggests they should have delayed the listing until the shares are here,” said David Webb, a Hong Kong-based shareholder activist.

Two analysts said China XLX appears overvalued in Hong Kong.

Trading at Premium

“There is no way XLX shares should be trading at a premium to the bigger boys,” Ng, an analyst at CIMB-GK Research Pte, said in a phone interview. The Henan, north China-based fertilizer company should trade at a lower valuation compared with bigger competitors such as China Bluechemical Ltd., he said.

China XLX shares closed at HK$5.20 (67 cents) after their listing by introduction in Hong Kong yesterday, compared with the stock’s closing price of 51 Singapore cents (37 cents) in Singapore on Dec. 7. “It won’t take too long” for the fertilizer company’s shares to fall, said Ng, who rates the stock “underperform.”

China XLX’s Hong Kong-listed stock now trade at 16.5 times projected earnings for next year, compared with 13 times for China Bluechemical, according to Bloomberg data.

The valuation for China XLX shares is “unjustifiable in our view,” Pei Hwa Ho, an analyst at DBS Vickers Securities in Singapore, said in an e-mail.

Asian Citrus, China’s biggest orange plantation owner, rose as much as eightfold in its Hong Kong debut on Nov. 26, compared with the stock’s previous closing price in London. Webb said trading information displayed by Hong Kong Exchange’s computers misled investors because the data failed to reflect a 10-for-1 split in Asia Citrus stock prior to the listing by introduction.

China XLX’s listing followed the required rules, Hong Kong Exchange spokesman Henry Law said.

Companies listing in Hong Kong by introduction would need to provide the last closing price of their shares on other markets ahead of their first day of trading, Hong Kong Exchange said on Dec. 4.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

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