Agile Property shares up 4.4pc as chairman freed from house arrest
Stock investors heaved a sigh of relief as Agile Property announced its chairman had been released from house arrest and returned to work on Monday.
Stock investors heaved a sigh of relief as Agile Property announced its chairman had been released from house arrest and returned to work yesterday.
The supposed release, two months after Chen Zhuolin was first questioned by authorities in Kunming, Yunnan, prompted analysts to raise the short-term target price of the stock even as they cautioned that the longer-term future of the beleaguered mainland developer remained uncertain in view of its disappointing sales and persistent governance issues.
Agile stock closed up 11.08 per cent at HK$4.51 yesterday on news of the chairman's release.
But Patrick Yiu Ho-yin, managing director of CASH Asset Management, said: "They did not clarify why the chairman was detained and why he was released. For investors, there are still uncertainties."
Agile's announcement in a filing to the stock exchange on Sunday night did not say why Chen was under investigation in the first place. The company was not available for comment yesterday.
Mainland media reports had earlier linked the investigation to allegations of graft at the company's Yunnan projects.
Guangdong-based Agile has denied reports that tainted former security tsar Zhou Yongkang was close to Agile's executive director and Chen's brother, Chan Cheuk-yin.
In its stock exchange statement, Agile only said the "management, operations and business of the group remain in its usual and normal manner".
The company, controlled by the Chen family, also announced the release of a "Mr Huang", thought to be Huang Fengchao, an executive director in charge of projects in Yunnan and Hainan. It said Huang would also return to work yesterday.
Agile's shares had dropped more than 35 per cent since mid-September when rumours first started circulating about Chen Zhuolin's difficulties with the authorities.
Edison Bian, head of China Property Research at UOB Kay Hian (Hong Kong), said: "Basically I think Agile deserves a re-rating."
Bank of America Merrill Lynch raised its price target for Agile to HK$4.90 from HK$4.20 after the announcement. The bank said it believed the chairman would not be charged.
Yiu of CASH Asset Management said the company was expected to miss this year's contract sales target.
In October, cash-strapped Agile negotiated with overseas lenders, including HSBC and Standard Chartered, to extend its loan facilities. Last month the firm completed a HK$1.65 billion rights issue, using the proceeds to repay the loans.
Standard & Poor's downgraded the firm's credit rating from BB to BB- in October.
