New World Development

Lai See

PUBLISHED : Thursday, 01 December, 2011, 12:00am
UPDATED : Thursday, 01 December, 2011, 12:00am

Now chief secretary's car gets in on the double-parking act

There's been a significant development in the car parking saga we have been pursuing for some weeks -albeit with precious little effect. People have e-mailed us complaining of the double-parking that occurs on Glenealy, the road that bends down underneath Upper Albert Road ending at the traffic lights opposite The Fringe Club. An eagle-eyed observer writes to say that on Tuesday at 14.03 hours he observed the official car of the chief secretary, Stephen Lam Sui-lung, illegally double-parked on this stretch of road, though the chief secretary himself was not present. A fine example for the rest of us and particularly the seven-seater crowd. This is hardly a resignation issue, though it's hard to tell what is these days. But we feel the chief secretary's driver, like Caesar's wife, should be above suspicion.

To be, or not to be ...

Browsing through Melco Crown Entertainment's Hong Kong listing prospectus, we came across a noteworthy section that talks about the relationship between co-chairman Lawrence Ho Yau-lung, the son of Macau gaming magnate Stanley Ho Hung-sun, and other companies associated with members of his family.

Through a chain of holding companies largely controlled by his siblings (Pansy, Daisy, Maisy and Josie), Lawrence owns an indirect, effective 2.769 per cent stake in Shun Tak Holdings and an indirect 1.347 per cent stake in rival gaming company SJM Holdings.

Lawrence maintained a low profile throughout the very public family battle at the beginning of this year over control of Stanley Ho's business empire, a dispute that mainly featured his father's third and fourth wives and the children of his second wife, of whom Pansy is the oldest. Yesterday, he made it very clear where he stood. Melco Crown's prospectus states that Lawrence 'is not, and does not intend to be, a director of SJM.' It used the same language regarding rival Macau casino firm MGM China, too, in which sister Pansy has a 27.4 per cent stake. But when discussing Shun Tak, the language in the listing document varied ever so slightly: 'Lawrence Ho is not, and currently has no intention to be, a director of Shun Tak.' The question then arises: So what about in the future? Lawrence was asked this yesterday at a press conference. 'I think that must be a typo,' he said, referring to the prospectus. 'I have never, ever been involved in those so-called 'Ho Empire' type of companies,' he told a roomful of reporters. 'This [Melco Crown] has always been my baby. So I don't have any intentions and I don't think I have any future intentions either,' he said. 'We should have put an exclamation mark in [the prospectus],' he joked. Hmm but one of the lessons of history is that we should never say never.

Make mine a large one

One of the curiosities of the stock market is the huge disparity in terms of valuation that the market gives to, for example, companies like Chow Tai Fook Jewellery Group and the mining companies that dig the material for the jewellery out of the ground. This is despite the higher margins that the mining company will make. Chow Tai Fook is reportedly listing on a forward PE of 19 times, whereas a company like BHP or Rio Tinto trades on a forward PE of around six times. We only mention this because in among the upcoming IPOs is China Polymetallic Mining (CPM), which is looking to raise about US$163 million (HK$1.3 billion) compared with Chow Tai Fook's HK$2.8 billion.

The company is based in Yunnan and its main asset is its Shizishan mine, which went into production in July this year and will be in full production in 2013. At this stage it is expected to produce 500 million ounces of silver per year, 57,000 tons of lead and 35,000 tons of zinc, all at good grades. Some 50 per cent of revenue will be generated by the silver, 33 per cent from the lead and 17 per cent from zinc. The company is also looking at a number of attractive acquisition options, which is essentially why it is coming to the market in these somewhat uncertain times. Indeed the company is positioning itself to consolidate the smaller mines in the Yunnan region.

It is unusual for mines to reach this stage of development without having come to the market earlier. But it has already had three rounds of private equity financing from Deutsche Bank, Morgan Stanley and Baker Tilly, which has involved it in significant due diligence.

Joint book runners for the IPO are Renaissance Capital and Citigroup. The prospectus says CPM intends to concentrate on upstream operations. One wag suggested this was a pity since if it were to start a jewellery business it could probably command higher multiples, closer to those achieved by Chow Tai Fook.