China GaoXian.....a major shareholder sells down to below 5%.....what is happening there ??
A significant shareholder (Carry Luck Investments/Hong Rong Zhi) which owned about 10.4% of the company had reduced his stake significantly to 4.99% through a married deal of 78mn shares. (see announcements)
This is not unexpected as the moratorium of the PRE-IPO investors is over. The CFO had alluded to this in my telephone conversation with him.
Another announcement is the appointment of a Deputy CEO - to look at the strategic direction of the company.
The recent sharp fall is probably linked to the placement.......!!!
a friend of mine who took some of the placement shares recently visited the factory and told me that despite it being the Golden Week - the factory was working flat out. ......if this is translated into earnings and China GaoXian delivers its RMB400mn or more net profit for 2010.....this could be a buying opportunity.
We should still be cautious and wait for the Q3-2010 numbers first......if the numbers pan out and the balance sheet remains strong, ie the cash levels are still there.....this could become a multi-bagger.
According to Bloomberg......the share is trading at 2-3 times PER only.....so if the 2010 numbers come through.....the stock could double bringing its PER inline with other S-Chips.
Another event that could trigger a rerating is the intended secondary listing in Korea. The latest announcement by the company says its still in a preliminary stage......but if it becomes more concrete with some indicative pricing, it could assist in the rerating of the shares.
All in - worth keeping in view (KIV).....for both Q3-2010 and its Korean listing plans.
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