Talk of 41 cents a share offer; trading halted pending an announcement

PLANS are afoot to take Li Heng Chemical Fibre Technologies private at 41 cents per share, pricing the company at some $690 million, say sources. The stock has been halted from trading since yesterday morning pending an announcement.

If it materialises, the offer price would be a 5.1 per cent premium over Li Heng's last traded price of 39 cents and a premium of 6 to 9 per cent over its volume weighted average prices (VWAPs) for one month, six months and 12 months.

This potential privatisation came amid news of delisting and dual listing plans by China companies listed in Singapore, or what are commonly referred to as S-chips.

Some dealers believe that Li Heng could be seeking a listing in Hong Kong.

'This is not the first and definitely not the last,' said a local dealer of the potential delisting of Li Heng. 'Quite a number of S-chip owners are not happy with the valuations they are fetching in Singapore.'

There was no news yet from Li Heng by press time yesterday. Li Heng was last trading at 10.71 times price-to-earnings (PE), versus its A-shares market listed peers Dymatic Chemicals at 26.29 times PE, Anhui Wanwei at 101.45 times PE, and Nanjing Hongbaoli Co at 33.73 times PE.

For the first half ended June 30, Li Heng fell victim to the economic crisis, registering waning sales and selling prices, which led to a 91.5 per cent slump in net profit to 48.2 million yuan.

China Precision and Sihuan Pharmaceutical have announced plans to delist and to relist on a recognised stock exchange in the future if market conditions are favourable.

Others that are seeking dual listing in Hong Kong include Z-Obee, China XLX and Midas Holdings.

Sihuan has already submitted the delisting proposal to the Singapore Exchange. Its exit offer price represents a premium of about 24.4 to 46.4 per cent over the one-month, three-month, six-month and 12-month VWAPs, while China Precision's represented a 25.79 to 68.67 per cent over its VWAPs for the same periods.

Another S-chip, Trump Dragon Distillers Holdings, also halted trading yesterday morning pending an announcement. Incidentally, both Li Heng and Trump Dragon were initial public offerings brought in by UOB-Kay Hian's A-team David Loh and Han Seng Juan.