Tricom rockets on Cyberport interest
Tricom Holdings shares rose more than 1,200 per cent yesterday in a frenzy of speculation after Cyberport developer Pacific Century Group said it was making a HK$2.46 billion bid for the company.
The stock closed at HK$1.84, more than 13 times its opening value of 13.6 cents, after peaking in early trade at HK$3.22.
More than 1.12 billion shares in the company were traded, almost double the free float of 579 million shares - indicating that the same pool of shares changed hands several times.
Turnover was HK$1.87 billion, more than double that of market powerhouse HSBC Holdings, and 16 per cent of the stock market total.
A speculative buy on the Cyberport theme had attracted punters to the stock, while its low liquidity exaggerated gains, brokers said.
'A lot of investors bought the stock no matter what the price,' said Delta Asia Securities research manager Ricky Tam Siu-hing.
Tricom Holdings warned that the share was trading at 26 times its unaudited net asset value of seven cents per share under Pacific Century's proposed asset-injection scheme.
The company's shares had traded as low as three cents early last month.
They resumed trading yesterday after being suspended since April 23 pending an announcement on the Pacific Century deal.
Pacific Century, controlled by Richard Li Tzar-kai, intends to use Tricom as its flagship for the Cyberport, a HK$13 billion project to create a high-technology hub in Pokfulam.
Despite the stock price's huge premium to its fundamental value, brokers were reluctant to predict that it would fall.
Celestial Securities Asia director Eugene Law Ka-kin said: 'I really don't know [about a fair value] - it seems the stock is holding at $1.60 to $1.80.' Most of the buying was by small retail investors attracted to the Cyberport concept, while institutions stayed clear of such a volatile stock, brokers said.
Core Pacific-Yamaichi sales director Terry Cheung said: 'For the Cyberport related things, we haven't seen any concrete stories taken out from this idea, so this is the wonder of the company.' One doubter was property tycoon Li Ka-shing, father of Richard Li.
'Do you think I would be so stupid to buy after it [the stock] has risen more than 10 times?' the elder Mr Li said after the opening ceremony of a residential home in Fanling.
Shares in Tricom's major shareholder, Star Telecom, closed 75.9 per cent higher at HK$1.46, while Star's parent, China Strategic Holdings, rose 101.1 per cent to 35 cents.
The Pacific Century Group's Singapore-listed arm - Pacific Century Regional Developments (PCRD) - saw its share price rise more than fourfold to close at S$4.86, after reaching S$6.20 earlier in the day.
PCRD's shares last traded at S$1.51 on April 23 before being suspended pending the announcement.
Lim Eng Hai, JM Sassoon Securities' Singapore research head, said Richard Li's timing could not have been better, given investors' present healthy appetite for Hong Kong and Singapore stocks.
Subject to regulatory approval Tricom Holdings will issue more than 1.2 billion new shares to the Pacific Century group, giving it a 75 per cent stake.