Shares of Sun Hung Kai Properties (SHKP) fell after the firm last Friday announced an unexpected bonus warrant issue that may raise as much as HK$22.2 billion. The second-largest developer in Hong Kong by market value saw its stock decline yesterday as much as 3 per cent, the most since May. It closed down 2.67 per cent at HK$96.65, the lowest since February 6. "The bonus warrant issue will result in a share dilution, investors do not like it," said Li Kwok-suen, a fund manager at Phillip Capital Management. Li believes the move is ultimately aimed at diluting the shareholding of his eldest brother Walter Kwok Ping-sheung, adding similar steps would come and not benefit shareholders. SHKP last week proposed a bonus warrant for every 12 shares and an interim dividend of 95 HK cents per share, with interim underlying profit down 7.8 per cent to HK$10.64 billion for the six months to December owing to lower property sales. Under the proposed warrant issue, each warrant will entitle the holder to subscribe to one new share at HK$98.60. Based on the controlling shareholder's 43 per cent stake in SHKP, it will cost the Kwok family about HK$9.5 billion to subscribe to the bonus warrants. Each of the three Kwok brothers and their families holds a third of the trust, meaning each of them would have to pay more than HK$3 billion to subscribe to the warrants. Walter Kwok reportedly said he would subscribe to the shares. UOB Kay Hian cut its target price to HK$90.40 from HK$99.30 and placed a sell recommendation on the stock. It said the bonus warrant is essentially a cash call that comes at a time when interest rates are low and share prices were trading at a discount. It said the issue and the aggressive residential launches suggested management was preparing for the worst. Credit Suisse lowered its target price to HK$114.50 from HK$121.03, although it kept its "outperform" call. The research house said the bonus warrant represents a share dilution of 8.3 per cent, but it would be partially offset by the option value of the bonus warrant.