STOCKWATCH: Tem Fat Hing Fung lower after Cheung Kong, Hutchison investment

HONG KONG (AFX-ASIA) - Tem Fat Hing Fung shares were lower this morning, as the terms of its share transaction with Cheung Kong and Hutchison Whampoa were seen unfavourable to the company, dealers said. At 11:19 am, Tem Fat Hing Fung was down 0.086 hkd or 45.74 pct at 0.102, on trade of 185.82 mln shares. Cheung Kong was down 1.0 hkd at 91.50 andHutchison fell 1.75 to 87.75. The Hang Seng Index was down 159.53 points at14,017.83. Cheung Kong (Holdings) Ltd and Hutchison Whampoa Ltd have agreed to invest around 186 mln hkd in the Tem Fat Hing Fung group. Under the agreement, Cheung Kong will buy 62.63 mln hkd worth of shares in Tem Fat Hing Fung, and it will also purchase 15.63 mln hkd worth of convertible bonds in RNA Holdings, a 33.71 pct unit of Tem at Hing Fung. Kenny Tang, associate director of Tung Tai Securities, said the agreement terms did not favor Tem Fat Hing Fung, as the per-unit price of the share subscription will be determined by the average price over the next five trading days. "It could be that the share price of Tem Fat Hing Fung was dragged down, so that Cheung Kong and Hutchison will end up paying less-than-expected," he said. "Before the transaction, there were market rumors that a Chinese party will be interested in taking a stake in Tem Fat Hing Fung at a higher price," he said. In contrast, RNA Holdings performed strongly this morning, on optimism that it will become a vehicle for Cheung Kong and Hutchison to develop the gold business on the mainland, a dealer from a local brokerage said. RNA is involved in the refining and trading of gold bullion and other associated products. "However, the rise in share price is not meaningful, and it could be driven by speculative interest," he said. RNA was up 0.005 at 0.255, on trade of 15.15mln shares. Can Do Holdings, which is also involved in the share deal, faced strong selling pressure this morning. Can Do, which is 33.71 pct owned by Te to Total Vision Ltd, Asvick Investment Ltd, Hilker Co Ltd, and Daslton Blue Ltd. All the subscribers are wholly-owned subsidiaries of either Cheung Kong or Hutchison, and they will transfer some of the convertible notes in Can Do to Tem Fat Hing Fung and RNA Holdings, as consideration. "There was not an immediate reason for the decline... perhaps, investors were negative about its earnings prospect, although Cheung Kong and Hutchison will become its shareholders," the dealer said. Can Do Holdings recorded a net loss of 52.3 mln hkd for the year to March in 2000, compared with loss 8.4 mln hkd for the same period in 1999. Can Do was down 0.53 hkd or 67.08 pct at 0.26, on volume of 54.32 mln shares.

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