INVESTORS sceptical of the Chearavanont family's injection of agriculture assets into CP Pokphand should take another look at the company's growth. With the US$37 million acquisition of 16 companies in China, the last batch of agri-assets injected by the family, CP Pokphand has grown to a size to allow it to go it alone for future expansion. It will no longer rely on the Chearavanont family, its major shareholder, to expand its agri-business interests in China. Thus, concerns about further dilution of earnings per share by way of new issues for acquisitions are removed, at least in the foreseeable future. The group's executive vice-president Tony Asvaintra made it clear that it did not like to see its earnings per share diluted by way of new issues. That's why the company has rejected the idea of raising funds through the issue of convertible bonds, which he said would ultimately dilute earnings upon the conversion of the bonds. Instead, it prefers to arrange straight bonds for future expansion if necessary. That reflects the management's determination to put all shareholders' interests first. Injection of assets from major shareholders is one of the most popular ways being used by Hong Kong-listed companies to expand their businesses. There are concerns that major shareholders may, in the process of asset injections, be acting at the expense of minority shareholders. However, CP Pokphand is a different story. Through a series of asset injections in the five years since its stock exchange listing in 1988, the group has grown bigger and bigger. The group's market capitalisation has expanded to US$950 million at November 1993 from $68 million in 1988. Five years ago, it had only one agri-business in China. Today, it has 50 agri-businesses on the mainland, all injected by the Chearavanont family. Investors looking for China plays might want to look again at CP Pokphand.
