Giordano shares surge as tycoon raises stake
Shares in Giordano International jumped to a record high yesterday after tycoon Cheng Yu-tung increased his stake in the casual wear retailer for a third time in a month.
The stock rose as much as 13.6 per cent to HK$7.58, its highest since the company went public in June 1991, before closing at HK$7.17 yesterday, up 7.5 per cent or 50 HK cents.
Investors grew bullish after billionaire Cheng, chairman of New World Development and owner of jewellery chain Chow Tai Fook, raised his stake to 16.2 per cent after buying 17.8 million Giordano shares at an average price of HK$6.13 last Wednesday, according to a Hong Kong stock exchange disclosure. It was the third purchase for Cheng, who bought 6.75 million shares in the company at an average price of HK$5.85 and 218.36 million shares for an average of HK$4.81 earlier this month.
Giordano's stock price has surged by 25 per cent since May 9 when Cheng (pictured) started raising his stake.
Hong Kong's Ming Pao newspaper quoted an anonymous source last Friday as saying Giordano's management thought Cheng would continue buying shares to gain a controlling stake in the company, although he was unlikely to make a hostile takeover. Spokesmen for Giordano and New World Development did not comment.
The retailer operates more than 2,300 stores in 30 countries.
First-quarter sales rose 26 per cent to HK$1.42 billion and gross profit grew 30 per cent to HK$823 million, the company said in a statement to the Hong Kong stock exchange earlier this month.
Taifook Securities analyst Winnie Fong said Cheng's increasing stake in Giordano could help it tap the high-end retail market because New World Development also had a retail arm on the mainland.