APT Satellite soars on privatisation murmurs

PUBLISHED : Thursday, 19 June, 2003, 12:00am
UPDATED : Thursday, 19 June, 2003, 12:00am

Brokers say the move is unlikely as ownership is scattered across too many stakeholders

Shares of APT Satellite Holdings soared into the stratosphere yesterday on speculation the commercial satellite operator will be taken private.

APT shares surged as much as $1.10 or 57.89 per cent to an intraday peak of $3 - the highest level since August last year. The counter later descended to an orbit of $2.725, giving a gain of 43.42 per cent. Over the past two days, APT shares have rocketed 61.2 per cent higher.

The stock was heavily traded with 10.21 million shares changing hands, or nearly 43 times the average daily volume over the past month.

Despite the privatisation talk, analysts doubted one would materialise, saying the exercise would be difficult to carry out.

'I don't think it's likely,' UOB-Kay Hian Hong Kong director Steven Leung Wai-yuen said. 'APT's shareholder structure is rather disperse. Everyone owns a 10-plus per cent stake. It's not easy to privatise a company if its shares are scattered among many people.'

APT is 51 per cent-owned by APT Satellite International, whose shareholders include China Telecommunications Broadcast Satellite; China Aerospace Science and Technology; SingaSat, a wholly owned subsidiary of Singapore Telecommunications; and Kwang Hua Development and Investment, a Hong Kong firm jointly owned by Ruentex Group and China Development Corp.

'This company has very low transparency,' Merrill Lynch analyst Agnes Ho said. 'But privatisation is unlikely with its evenly spread-out shareholding structure.'

In addition to the privatisation rumours, the buzz among brokers yesterday was that APT was talking to web portal Yahoo! about a possible equity investment.

'APT might receive some asset injection as part of its consolidation,' one market source said. 'There have been signs the company is materialising its consolidation plan, especially after it announced quite a disappointing result last year.'

Turnover at APT dropped from $374.15 million to $351.42 million last year, as net profit fell 68.68 per cent to $24.43 million.

A Thomson First Call's poll of four analysts found the company is expected to report higher profit of $86.78 million for this year but drop again to $48.48 million next year.

An APT spokeswoman declined to comment on whether an asset injection was possible. 'We are not aware of [reasons for] the share price movement and we have nothing to announce to the public at the moment,' she said.

DBS Vickers Securities analyst Wallace Cheung said the firm had been facing stiff competition in the mainland market from the likes of ChinaSat, SinoSat and HK Satellite.

'It is also losing out to [Asia Satellite] because it does not carry the more popular TV channels,' he said. 'APT lacks such 'hot birds'.'

Mr Cheung said APT needed additional capital to finance the launch of new satellites in the coming years, which would put a strain on its financial position. 'We believe the recent rebound in its share price has been overdone,' he said.

Also caught up in the excitement yesterday was rival Asia Satellite Telecommunications Holdings, which gained 5.09 per cent in APT's wake. The stock closed at $13.40, with 967,000 shares traded.

Brokers said the rise in Asia Satellite shares was due only to copy-cat buying.

'There is no news for AsiaSat, it's just follow-on buying,' said Voon San Lai, a regional telecommunications research director at BNP Paribas Peregrine.

If a privatisation fails to materialise for APT, there is little other news to support its shares at their lofty heights. Regional transponder demand has been in a prolonged funk. In addition, more China-focused satellites are on the launch pad.

Investors hitching a ride on this rocket could wind up burning out.