Private thoughts

WILL Hong Kong's investment community ever accept or, for that matter, understand Semi-Tech (Global) Co, the investment and corporate restructuring boutique overseen by unassuming chairman James Ting.

Despite a growing track record of successful turnarounds, analyst coverage of Semi-Tech remains hit and miss, with responsibility either shifted on a regular basis or dropped from research files.

Semi-Tech's stock has done little to excite investors, hovering between $13.60 and $17.40 during the past seven months after hitting a high of $20.50 in July last year when the company sold its 51 per cent stake of Singer for US$847.9 million to Toronto-based parent International Semi-Tech Microelectronics.

Semi-Tech's fundamental problem is that it is an unusual investment vehicle, distinctly different from any other publicly listed company in Hong Kong.

The company's business is to identify weak or money-losing businesses, implement restructuring programmes and, after turning them around, sell their position for profit which is paid out to shareholders.

This can be a risky business because there is no guarantee that management's best efforts will be rewarded.

As a result, the stock holds little interest for institutional investors who are more risk averse and prefer companies with future earnings more visible than Semi-Tech's.

And while Pfaff and Sansui Electric both appear to be on the verge of becoming profitable entities, analysts do not view either business as having the same stature as Singer, which has an internationally known brand name.

''Pfaff is not Singer and Sansui is not Sanyo,'' an analyst said.

As a result, investors who buy into Semi-Tech are buying into the corporate finance concept and the management skills of Mr Ting and his team.

The company's future hinges on management's ability to uncover more undervalued assets to make use of the $3.41 billion of cash on its balance sheet.

Given the mixed state of investor interest, the issue is whether Semi-Tech should remain publicly listed in Hong Kong.

It might make more sense for the firm to be privatised by ISTM, which already owns a 42 per cent stake.