STOCKWATCH: Cheung Kong higher on rebound; acquisition hopes

HONG KONG (AFX-ASIA) - Cheung Kong was higher on a technical rebound in morning trade, coupled with hopes that the company may make an acquisition in the near term after a proposal to increase its authorised capital by 1.0 bln shares, dealers said.	    At 11:05 am, Cheung Kong was up 2.25 hkd at 81.0, on trade of 3.07 mln shares.	    The Hang Seng Index was up 262.34 points at 12,970.24.	    Kenny Tang, associate director of Tung Tai Securities, said there are a few possible motives for Cheung Kong to increase its authorised capital base, including share placement and acquisition plans.	    "Cheung Kong has authorised capital of 2.8 bln shares and it has issued capital of 2.3 bln shares," he said.	    "The company is paving its way for a share placement. It may also be related to a potential acquisition, and the consideration will be satisfied by Cheung Kong's shares," he said.	    Franklin Lam, an analyst with UBS Warburg, said he believes Cheung Kong is planning to purchase new businesses, given the group's aggressive acquisition strategy.	    "Its plan to increase the capital base may be in connection to new acquisition initiatives. Its flagship companies have been active in acquisitions...for instance, Hutchison is buying different businesses," he said.	    Lam said the dilution impact on Cheung Kong's earning per share (EPS) will be minimal, as any new acquisition -- which calls for the issue of new shares -- will generate substantial value for the company.	    "Cheung Kong's management has a good track record, and it will ensure that the acquisition is not over-priced," he said.    

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