Mirabell boss to gain HK$1.65b in stock deal
Belle share move will better reflect hidden value
The chairman of Hong Kong shoe retailer Mirabell International Holdings is set to pocket HK$1.65 billion in stock as part of the company's plan to distribute to its investors HK$3.3 billion worth of shares it holds in mainland competitor Belle International Holdings.
The company made the announcement yesterday as it released its results for the year to February, showing a 61 per cent jump in net profit to HK$105.5 million mainly due to the surge in value of its stake in Belle.
Earnings per share were 41 HK cents. Operating profit for the year rose 11.88 per cent to HK$60.97 million on sales that were up 7.85 per cent to HK$934.2 million.
Under the divestment proposal, Best Quality Investments, of which Mirabell owns 30 per cent, would distribute all its 1.25 billion Belle shares to its owners, Mirabell said in a statement filed with the stock exchange. The identities of the Best Quality owners were not disclosed.
Mirabell said it would receive 375 million of the shares, or a 4.4 per cent stake in the largest retailer of women's shoes on the mainland, and then allot 71 Belle shares for every 50 Mirabell shares outstanding, according to the statement.
That means Mirabell chairman Tang Wai-lam, who owns 53.66 per cent of the firm, or 136.5 million shares, will receive 193.8 million Belle shares.
Shares of Mirabell, which had been suspended since Wednesday pending the announcement, surged as much as 68.5 per cent yesterday after it resumed trading before closing with a 58 per cent rise to HK$14.06.
Shares in Belle dropped 3.4 per cent to HK$8.50, trimming the gain to 33 per cent from the company's initial public offering price last month.
Mirabell said it intended to distribute the shares because 'the group's principal business activities do not include trading in listed securities and the group has cash and other liquid assets in excess of its current needs'.
It also said that 'the board considers that the current share price of the company does not fully reflect the market value of the Belle shares'.
The proposal requires approval from Mirabell shareholders.
Tung Tai Securities associate director Kenny Tang Sing-hing said because Mirabell indirectly held only a minor stake in the mainland company, it could not consolidate the profits.
'So giving investors Belle's shares will enable the market to reflect the hidden value of Belle's shares in Mirabell,' he said.
However, Mr Tang said Mirabell's shares would become much less attractive after its distribution of Belle's shares. 'Mirabell's core business is in Hong Kong. Obviously, investing in Hong Kong's retail market is much less attractive than investing in the mainland market,' he said.
Belle and Walker Group have both listed in Hong Kong this year to fund the expansion of their mainland retail networks.
Shoemaker Yue Yuen Industrial and listing candidate Stella International Holdings also plan to increase their retail networks in the country.
Sun Kung Kai said in a recent research report that Mirabell's core business faced a tough future.
'Room for further growth in Hong Kong is limited, as the market is quite mature and highly competitive,' the report said.
