GUANGDONG Investment is one of the stock market's favourite China plays, but analysts say that, although its strong group earnings growth is attractive, it needs a clearly defined corporate strategy.
The Guangdong government-controlled company reported an 11-fold profits rise to $160.21 million for calendar 1992. Fully diluted earnings per share rose 183.46 per cent to 13.32 cents.
The result was slightly behind market expectations. Analysts expressed further disappointment, complaining that the dividend of six cents, up 50 per cent, was too low.
Parent Guangdong Enterprises is a private company owned by the provincial government of Guangdong and Guangdong Investment represents one of the latest developments on the Hongkong stock market.
Mainland Chinese penetration of the stock market is growing with the use of back-door listings. An example of the way things are done is the celebrated activities of mainland steel-maker Shougang Corp, which has three locally listed companies under its direction.
The intrigue and complicated merchant banking linked to these listings makes for good news articles and rabid market speculation, but the takeover groups themselves have little or no defined strategy.
This lack of clear investment plans is something most of the mainland-associated Hongkong listings have in common.