Pearl Oriental Innovation will raise a net HK$114 million for working capital and possible investments in energy and natural resources projects overseas through a top-up placement of 115.7 million shares at HK$1.02 each. The price of the placement, the company's latest effort to reinvent itself, represents a discount of 3.8 per cent to the stock's closing price of HK$1.06 yesterday. The share price has dropped about 16.5 per cent since trading was suspended last Tuesday for the announcement yesterday. The new shares amount to 10.22 per cent of the company's enlarged issued share capital. The sale is expected to be completed by tomorrow. A spokesman for Pearl Oriental refused to disclose further details over the projects in which the firm might invest. 'But [some of them] will get finalised in a couple of weeks,' he said. The placement is part of the company's latest strategy to turn from the logistics sector to the energy and environment industry. Pearl Oriental, formerly China Merchants DiChain, was principally involved in logistics and vowed about five years ago to become the biggest player in the mainland market. The group started to shift its business focus after chef-turned-entrepreneur and speculator Wong Kwan completed his purchase of a controlling stake in DiChain for HK$80 million in May 2006. In the following year, the group raised about HK$76.4 million through share placements to fund the joint venture it set up along with Citic Merchant to develop the mainland's oil exploration business. Around the same time, the company also entered the mining and plastic recycling sectors, buying a 40 per cent stake in China Coal Group for HK$400 million and acquiring 50 per cent of Exploitation Resources Internationales, a French plastic recycler, for HK$50 million. Pearl Oriental also announced in the same year a plan to spend HK$400 million to buy a copper mine in Hami, Xinjiang province, which was believed to be able to generate a value of HK$44 billion. However, the new businesses failed to boost the group's profit. It recorded a loss of HK$12.96 million for the six months to June, an improvement from a loss of HK$18.69 million in the same period last year. Wong, the chairman, said earlier this year the group had decided to withdraw from the logistics market and focus on the development of its plastic recycling business. Kenny Tang Sing-hing, the head of research at Redford Securities, expressed concern over the company's development strategy. 'The company lacked a core business over the past years, and therefore it was hard for it to have stable cash flow,' Tang said. He said some listed companies were keen to follow the 'hot industries' in the market. 'They understand that it would be easier to raise funds from the stock market today if they label themselves with words like 'environment industry',' he said. 'I suggest investors examine whether these companies are really engaged in the relevant business before putting money into them.'