Wait and see on Li firms shares Investors are advised not to pile into shares of Cheung Kong Holding (0001) and Hutchison Whampoa (0013) which are set to rise today after the firms announced plans to merge last Friday. Both firms American depository receipts climbed more than 9 percent after the announcement. Analysts said rises in the companies shares today will likely catch up with their leaps in the United States. Cheung Kong stock may go up by over 10 percent, with Hutchisons by slightly less than that, said Amicus Asset Management director Conita Hung Lai-ping. But it will be risky to buy at higher levels for now. You dont know what other news will come out when there is still some time before the action. First Shanghai Securities chief strategist Linus Yip Sheung-chi said it may take time for the shares to match their American gains, and investors should wait and see before deciding to stake their money. Markets expect the restructuring to bring out the embedded value of both companies - especially Cheung Kong, currently controlling 50 percent of Hutchison Whampoa - and create a simpler business and equity structure. Hung said the prices will receive another boost when the new entity, CK Hutchison, spins off its real-estate assets into a separate listed company, Cheung Kong Property Holdings. Cheung Kongs investors will receive one share in CK Hutchison for every share held in the developer, while Hutchison shareholders one share will only give them 0.684 share in the new group, potentially resulting in odd lots that are harder to sell. After the restructuring, CK Hutchison will hold 40.21 percent of Toronto- listed Husky Energy, whose 155,000-barrel-per-day crude oil refinery in Lima, Ohio, was rocked by an explosion on Saturday. Sources said output had been stopped, Reuters reported. Shares of Cheung Kong slipped 0.6 percent to HK$124.8 at trading close last Friday, while Hutchison Whampoa gained 0.8 percent to HK$87.4. The Hang Seng Index rose 0.4 percent.
Posted on: Mon, 12 Jan 2015 06:12:16 +0000
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