(Yicai Global) Oct. 8 -- The stock price of Chinese Estates Holdings, a former major shareholder of troubled property developer China Evergrande, fell after surging yesterday following its announcement of a HKD1.9 billion (USD244 million) plan to go private.
Chinese Estates [HKG:0127] fell 1.1 percent today to close at HKD3.78 (49 US cents). The stock soared by as much as 32 percent yesterday.
Solar Bright, owned by Hong Kong businessman Joseph Lau’s wife Chan Hoi-wan, who is also Chinese Estates’ biggest shareholder, required the Hong Kong-based developer’s board to propose the privatization to shareholders on Sept. 28, Chinese Estates said on Oct. 6.
Solar Bright offered HKD4 per share, an 83.5 percent premium on Chinese Estates’ closing price of HKD2.18 on Sept. 29, the last day of trading before China’s National Day holidays that ended yesterday.
The impetus for the stock market delisting is the challenges and uncertainties that Chinese Estates is facing, as well as the social and economic impact of the pandemic, which is extremely severe and unprecedented, it said.
The company’s loss from selling Evergrande equity is expected to reach about HKD3.5 billion (USD444 million) by the end of the year, it noted in the statement. Its Evergrande stake has dropped to 4.4 percent, and Chinese Estates may sell its remaining Evergrande shares over the next 12 months, depending on market conditions, it said in a stock exchange filing on Sept. 23.
The firm’s net loss reached HKD37 million (USD4.8 million) in the first half, versus a HKD786 million (USD101 million) net profit in the same period last year. Revenue from investment properties continued to be one of Chinese Estates’ major sources of income, despite falling 24 percent to HKD161 million (USD25 million).
Editor: Futura Costaglione