New | China Jiuhao Health shares jump in Hong Kong on sale of unit
Shares of China Jiuhao Health Industry Corporation soared on Monday in Hong Kong because it will gain HK$1.65 billion from the successful disposal of its subsidiary, while Cash Financial Services Group and Celestial Asia Securities Holdings stocks fell sharply due to the failure of Celestial Asia to sell its stake in Cash Financial.
Jiuhao’s share price jumped 74.3 per cent to HK$1.22 by Monday noon. The Chinese healthcare-related company’s shares were suspended on December 12, 2014 and resumed trading on Monday morning.
Last Friday, Jiuhao announced it sold a subsidiary that operates a golf and spa club in Beijing to a Hong Kong-listed firm, Eternity Investment, for HK$1.65 billion. Related to this disposal, Jihao also said it will distribute a total of HK$500 million in cash plus 1.5 billion Eternity shares to all Jiuhao shareholders.
“Normally when a company disposes its assets and realises a hefty profit, the share price will react favourably,” said Louis Wong, a director of Phillip Capital Management. Another possible reason for Jiuhao’s share price spike is the dividends to be given to its shareholders from this disposal, said Wong.
Cash Financial, which provides brokerage services, was the second biggest loser on Monday morning, with its share price plunging 15.4 per cent to 77 Hong Kong cents, while Celestial Asia, which offers internet and mobile services in the mainland, was the fourth biggest loser, with its stock price falling 11.8 per cent to HK$1.64.
The Hong Kong shares of Cash financial and Celestial Asia were suspended last Wednesday and resumed trading on Monday morning.
On March 10, Cash Financial announced an agreement where Celestial Asia Securities Holdings would sell 40.71 per cent of Cash Financial for HK$613.39 million to Oceanwide Holdings, a Shenzhen-listed company. But last Friday, Cash Financial announced the deal lapsed because certain conditions could not be fulfilled.
The failure of the Cash Financial deal is the main reason for its share price drop on Monday morning, said Kenny Tang Sing-hing, chief executive of Junyang Securities. Cash Financial’s share price had risen sharply earlier on expectations that Haitong’s acquisition of Cash Financial would succeed, so it sank after the deal failed, Tang said.
The biggest lost on Monday was posted by the Green Energy Group, whose share price plunged 21.1 per cent to HK$1.20. The trader of waste material announced no major news in recent days, and only announced last Friday that it had completed an HK$8.5 million acquisition of a property.
“Maybe there is profit taking pressure. The trading of this stock is thin. If big orders come from the market, it is easy to push down the share price,” Tang said.
On Monday, 20.5 million Green Energy shares changed hands, a much higher turnover than the 3.1 million shares last Friday. The company has a market capitalisation of HK$779 million and a share float of 426.1 million shares.
