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Eric Ng

Shares in Yew Sang Hong (Holdings) went on a wild ride yesterday, plunging as much as 41.5 per cent before finishing the day just 1.2 per cent lower.

The activity was prompted by the company announcing trading in its shares had been investigated by the Securities and Futures Commission (SFC).

In a statement to Hong Kong Exchanges and Clearing, the electrical engineering contractor warned of the high concentration of shares in the hands of a few shareholders and told investors to exercise caution when dealing in them.

Yesterday its shares traded as low as HK$4.85 in the morning, before closing at HK$8.20, only 10 HK cents lower than Thursday's HK$8.30 close.

About HK$7.5 million worth of shares changed hands during the day's trade.

Directors pointed out that, since December, Yew Sang Hong's share price had risen 12-fold - from 69 HK cents on December 18 to HK$9.20 on July 24.

At HK$9.20, the stock was trading on 2,091 times earnings, and 16.4 times its March 31 audited net asset value per share of about 53 HK cents.

On July 24 its market capitalisation was about HK$2.1 billion.

On May 21, 12 shareholders controlled 94.4 per cent of the company, of which 47 per cent was owned by chairman Lai Sai-sang and his wife, 28 per cent by director Hon Ming-kong and 19.4 per cent by 10 other investors.

The company agreed on May 21 to place 23.8 million new shares at HK$5.13 each to independent investors but information on the high concentration of share ownership was not provided to the placing agents or the placees before the completion of the placement on June 29.

Between May 22 and June 25, Mr Lai and his wife sold 15.29 million shares on the market - about a 6.8 per cent stake.

About 92.4 per cent of the shares were taken up by four overseas entities, which were among the 10 shareholders holding 19.4 per cent of the firm on May 21. On July 5, Mr Lai, his wife, Mr Hon and the 10 shareholders held 90.1 per cent of the company.

Yew Sang Hong said: 'The directors are considering to conduct an investigation under Section 18 of the Securities (Disclosure of Interest) Ordinance to establish the identity of the shareholders and their respective stakes in the company.'

It would make separate announcements when it began the investigation and when the result was available.

On July 18, the company agreed to buy 60 per cent of software and network product-maker Cyber Touch for HK$18 million.

Cyber Touch's principal subsidiary - formed in June 2000 - had an unaudited net loss of 400,000 yuan (about HK$375,040) in the first five months this year, with net assets of about 1.3 million yuan.

Independent valuer VC Partners (Asia), hired by Yew Sang Hong, valued Cyber Touch at HK$30.37 million. Under listing rules, the transaction need not be approved by shareholders.

Yew Sang Hong is arranging to set up a joint venture with a mainland party to provide credit information services to customers including investors, financial institutions and regulators.



Wild ride for Yew Sang Hong stock