Lai See

PUBLISHED : Wednesday, 08 June, 2011, 12:00am
UPDATED : Wednesday, 08 June, 2011, 12:00am

Having a hard time seeing Sino-Forest for the trees

Analysts have been thrown into disarray by the sensational claims against Hong Kong- and Canadian-listed Sino-Forest Corp by Carson Block's company Muddy Waters. The company's stock traded at about C$20 (HK$160) for most of last month when Credit Suisse, for example, reaffirmed its 'outperform' C$28 target for the company.

After Block's accusations that Sino-Forest had been inflating its assets the share price fell 95 per cent to C$5.23 on Friday. On Monday, Credit Suisse presumably without having time to check the veracity of Muddy Waters' claims downgraded the stock to 'neutral' and a target price of C$6.

However, Sino-Forest's management reacted to the claims by publishing bank statements and land agreements to show its assets are legitimate.

The stock has bounced back 18 per cent to C$6.16. So does Credit Suisse now believe the stock is overvalued? Maybe it's time to start counting those trees. It's hard work but somebody ought to do it.

Failure to find value

Oh dear, what can we say about Resourcehouse and its four failed attempts to get listed. We are reminded of Lady Bracknell's comments in Oscar Wilde's Importance of Being Ernest. 'To lose one parent, Mr Worthing, may be regarded as misfortune; to lose both looks like carelessness.'

Resourcehouse and its advisers appear to have been exceedingly careless. To get it wrong once is perhaps forgivable but four times is unthinkable. The offer was pulled 'given global market conditions'.

These negative conditions did not stop MGM's offering last week and so far Prada has shown no indications of pulling its offer.

Resourcehouse's owners and advisers must know that the offer failed because of problems particular to the issue rather than market weakness.

These matters are ultimately a question of valuation, and investors took the view that the peculiarities of this deal did not offer value at the price the issuer needed. Should it come back for a fifth attempt it will either have to radically rearrange the fringe deals or offer more value.

In the past other issuers faced with a reluctant market have cut the size of the offer and the price, creating a buoyant aftermarket. Then they come back and offer more stock at higher prices.

Bunnies for Dragon Boat Day

While most of Hong Kong was enjoying the dragon boat holiday on Monday and its sweltering heat, the press doesn't stop working.

Lai See briefly inspected the dragon boat proceedings at Stanley which have not changed much over the years, only the names on the corporate boats.

However, there was one new corporate this year, which seemed to attract some attention.

Playboy had a junk resplendent with its famous Bunnies. The Playboy Club opened in November last year at the Sands Macao casino making it the first of a number it hopes to see in the region. We felt obliged to visit and came away duly impressed.

Reflections from Tang

David Tang, who has a knighthood and was the founder of Shanghai Tang, has been talking to London's Sunday Times. 'I don't believe in acrimony; it's boring, and it wastes so much time. I've been extremely lucky to have a very understanding second wife, who gets on with my children beautifully, and with my ex-wife,' he tells the newspaper.

It had clearly caught him in a reflective mood. 'At the risk of sounding like an old fool spouting pearls of wisdom, I'm philosophical when I'm with my children. The most important thing to have is knowledge as opposed to information. Those two are often confused. I tell them that it is only through reading that they can expand their own horizon. It is the same in social situations: if you're going to have people round for dinner, ensure they're more intelligent than you so they can teach you a thing or two.'

Hear, hear, say we.

Pressure point of money

William Cohan, author of Money and Power: How Goldman Sachs Came To Rule The World, has been speaking at the Hay Festival, an annual literary and arts event held in Wales. Talking about the response from Goldman, he said: 'When they heard I was doing this, it was 'Let's see if we can get this guy hit by a bus',' though it did not act on this impulse.

He says there are people worse than Goldman. 'People at Lazard were much more threatening.' Cohan was forced to change his number. 'When someone with a billion dollars is angry with you, they are not going to leave you alone.'


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