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Peggy Sito

Chinese Estates Holdings  surprised the market yesterday by announcing it had sold its entire multibillion-dollar equity portfolio  last year.
The  medium-sized developer chaired by Joseph Lau Luen-hung said the sale would  give the company a one-off net investment income boost of HK$3.65 billion for last year.
Chinese Estates' listed equity  assets were valued at HK$8.16 billion  as of December 31, 2007,  it said in a filing with the Hong Kong stock exchange.
It did not  give  a reason for the disposal or details  of its stock investment portfolio.
A company spokesman yesterday said  falling stock prices were not a major factor  in the sale, but she did not elaborate.
She said Chinese Estates started selling its investments in quality listed securities in the first half, booking  a net gain of HK$1.44 billion from  the sale of HK$3.69 billion worth of equity holdings  during the period.
According to Chinese Estates' annual report, it has short-term equity investments in five major Hong Kong companies: Agile Property Holdings, Bank of China, Bank of Communications, China BlueChemical and Ping An Insurance (Group), the mainland's second-largest insurer.
'Chinese Estates started buying equity securities years ago and some of them have made profits,' said Kenny Tang Sing-hing, the head of research at Redford Securities.
'It is not surprising that listed companies sold their securities investments to lock in earnings amid a falling market. But I am a bit shocked that  [Chinese Estates] has sold the entire portfolio.'
For  the investments in Ping An and Agile, analysts said it was not easy to estimate how much Chinese Estates made or lost  because it was not known when it bought or when it started selling shares.
Last year,  Ping An's shares fell 54.57 per cent to HK$37.50 and Agile  dived 69.76 per cent to HK$4.04.
Analysts said Chinese Estates  had shown a strong interest in stocks,  especially mainland-related  plays such as Ping An and Agile.
In August 2007, Chinese Estates and Mr Lau announced they held 5.12 per cent of Ping An at an average price  of about HK$64 per share. Of that, the developer owned about 70 per cent,  analysts said.
The company and Mr Lau later increased their holdings to 7.03 per cent and started selling when the stock rose to HK$107. By  November 30, 2007, Chinese Estates and Mr Lau together reduced their holdings in Ping An to less than 5 per cent.
Sun Hung Kai Financial strategist Castor Pang Wai-sun said property sales were  slow amid the falling property market and the uncertain economic outlook. He said the downturn  had hit the cash flows of many developers including Chinese Estates. The equity sale would improve the company's cash position and its bottom line, he said.
In the first half, the firm's  profit from property sales  tumbled 83.2 per cent  to HK$114.8 million from HK$682.8 million. No major project was launched in the second half.



Chinese Estates equities sell-off nets HK$3.7b