IF NOTHING else, one has to admire the gall of the Lau brothers for their latest corporate surprise. There can be few stock market virgins on the share registers of Evergo International or Chinese Estates in which Mr Joseph Lau and Mr Thomas Lau are controlling shareholders. The group's frequent right issues and privatisation schemes have been enough toscare off widow and orphan investors. Yet even the most cynical of shareholders will have been taken aback by the Lau's decision last week to pay no dividends, despite a 120.8 per cent rise in profits at Evergo to $279.65 million and a 54.3 per cent rise at Chinese Estates to $639.46 million. The no-dividend strategy is not new. The last time shareholders in the group received a payment was at the 1991 interims. The official reason given for the failure to pay dividends this time is that the money is needed for development projects in Hongkong and China. Most companies manage to do this through prudent borrowing, while maintaining a consistent dividend policy. However, in a statement last week, Mr Joseph Lau explained why the company had decided not to go this route: ''Although Chinese Estates is able to seek bank refinancing, the current state of the finance markets in Hongkong has not improved with regard to the raising of significant sums for the acquisition or development of investment properties,'' he said. Shortage of bank funds has not been a common complaint among property developers. In most cases, not declaring a dividend would be the sign of a company deep in trouble, but not in the case of Evergo and Chinese Estates. One of the effects of not paying a dividend is to surpress the price of the group's stock, making it less attractive for investors to hold. Despite record market gains on Wednesday, which saw the Hang Seng Index rise 5.79 per cent, Chinese Estates made no ground at all and Evergo posted a drop. Twice in the last three years, the Laus have attempted to privatise Chinese Estates and unlock the real value of the firm - it is currently trading at a massive 52 per cent discount to its NAV (net asset value) with the new China Entertainment Building alone having been valued at $2.4 billion. The most recent attempt was noisily protested by minority shareholders. It failed at the final hurdle when the proposal was withdrawn after an affidavit had been lodged in the Supreme Court in Bermuda, where the company is domiciled. That was a year ago and, under stock exchange rules, 12 months must elapse before a new privatisation offer can be made. Last week's no-dividend announcment seems to herald the start of a new campaign to privatise.
