News

Tech Pro (3823) crashes 86.3%: we told you so
Webb-site.com, 28-Jul-2016
In our article of 24-Sep-2015, we pointed to 3 bubbles, 2 of which have now burst: L & A (8195) and Tech Pro (3823). The remaining one is umbrella-maker China Jicheng (1027) which has net tangible assets at 31-Dec-2015 of about HK$0.0067 per share (post-split), so it has about 97% downside from today's closing price of $0.224.
SEHK may delist China Oriental (0581) in 6 months
SEHK, 27-Jul-2016
This threat can only hurt the public shareholders who own 7.9% and have had their investment frozen since 29-Apr-2014 on the grounds that the float is too small. At the suspended price, the public float is worth HK$269m, larger than in many other listed companies. Ironically, SEHK blames the company for "depriving shareholders of trading their shares". Look in the mirror, SEHK, it's your rule. Scrap it.
Carpenter Tan (0837) punts CNY86.5m on WMPs
Company announcement, 27-Jul-2016
The comb-maker says it has "idle funds" generated from operations and raised in the 2009 IPO. Comment: idle funds should be returned by special dividend, not hoarded and punted. The capital is guaranteed by CCB but the 3% "expected returns" are not and presumably depend on the performance of the underlying investments, net of fees. Investors don't need listed companies to make investments for them - they can do that themselves. Some 68% of the firm's net assets are in cash at 31-Dec-2015.
L & A (8195): AGM postponed due to forged proxy form
Company announcement, 27-Jul-2016
The former bubble stock remains suspended pending inside information. It crashed 91.6% on 6-Jul-2016.
FSDC welcomes green bond issued by Link REIT
HK Government, 15-Jul-2016
Comment: this is a classic piece of greenwash. It is just a regular bond which will be part of Link REIT's overall capital resources. What next - a Sukuk? Will the next Link REIT building be both "green" and Sharia-compliant?
China Inno Fin (0412) belatedly details investments at 31-Mar-2016
Company announcement, 13-Jul-2016
This follows a complaint by Webb-site to SEHK. The firm held 9.95% of China Smarter Energy (1004), 4.49% of Huarong (0993) and 1.34% of Carnival (0996), as well as having sunk HK$340.8m into Joint Global Ltd, the newest unlisted hub in what we call the "Chung Nam Network". It provides no details of this significant investment, which in our view should have been announced when made.
Hong Wei (8141) v Registrar of Companies
HK Court of First Instance, 13-Jul-2016
Only after the Companies Registry had begun a prosecution for failure to file a return of IPO allotments within 1 month, did the company apply to the court for an extension of time to the actual filing date, some 21 months after the IPO. Justice Jonathan Harris rejects the application.
HKSAR v Deborah Annells: reasons for sentence
HK Court of First Instance, 11-Jul-2016
The convicted thief and fraudster gets 9 years. She was earlier convicted of perverting the course of public justice, and the combined sentence is 10 years and 6 months. She could be released under supervision after 5 years and 3 months, including any time served.
CAID (0048) reveals the other shareholders of GEO Securities Ltd
Company announcement, 7-Jul-2016
This follows a complaint by Webb-site that CAID had failed to say who it was getting into bed with. This turns out to be Capital VC (2324), which is subscribing 29.997%. The remainder will be held by Ms Li Chui Ling, who currently owns 100%.
China Fortune (8116): resignation of Co-Chairman
Company announcement, 7-Jul-2016
This follows a complaint by Webb-site that, under the Articles of Association, the board can only elect one Chairman. It has had two Co-Chairmen since 5-Nov-2012. The Listing Rules also contemplate special duties for the Chairman which would not make sense if there were more than one.
CAID (0048) to subscribe 42% of stockbroker GEO Securities Ltd
Company announcement, 28-Jun-2016
A second, unnamed subscriber is taking 283.78m shares (27.997%) of the broker. The announcement also fails to disclose who will own the remaining 30.003%, instead just naming the manager, Francis Lun Sheung Nim, who is often quoted in the media.
China Opto (1332) discloses the junk held by Win Wind Capital Ltd
Company announcement, 28-Jun-2016
This follows a complaint filed by Webb-site on 23-Jun-2016 that the Major Transaction circular, which was presumably vetted by the Stock Exchange, failed to include any information on the underlying investments held by Win Wind Capital Ltd, with which China Opto is engaged in a share swap. Several of the stocks are in what we call the "Chung Nam Network".
SFC bans Liu King Yee, ex-Wing Lung Bank, for life
SFC, 27-Jun-2016
We include the reasons for sentence in the criminal case and the judgment in her appeal against sentence (both in Chinese) in this bundle. The SFC does not mention that her sentence was reduced by 1 year on appeal.
Submission to Public Engagement Exercise on Retirement Protection
Webb-site.com, 21-Jun-2016
We call for abolition of non-means-tested schemes, staggered subsidies for public healthcare and a deployment of the savings on a higher socal safety net and better healthcare. HK can't pursue a universal handout without breaching the Basic Law, and even if it could, the Laffer Curve may make it unsustainable as taxable profits and earnings would shift away. Finally, the MPF is a costly interventionist failure that should be scrapped, and if it is not, then LSP must be phased out to allow full portability of MPF assets.
Man charged for alleged electricity meter tampering after return to HK
ICAC, 21-Jun-2016
13 years after jumping bail he has returned to HK - and has been released on bail.
Duo charged with bribery over purchase of musical instruments
ICAC, 21-Jun-2016
A duo, but not a duet - they were solo cases. This is the latest in a series of actions involving alleged commissions from Chairman Instruments Trading Ltd.

Our stories

Tech Pro (3823) crashes 86.3%: we told you so
In our article of 24-Sep-2015, we pointed to 3 bubbles, 2 of which have now burst: L & A (8195) and Tech Pro (3823). The remaining one is umbrella-maker China Jicheng (1027) which has net tangible assets at 31-Dec-2015 of about HK$0.0067 per share (post-split), so it has about 97% downside from today's closing price of $0.224. (28-Jul-2016)
Submission to Public Engagement Exercise on Retirement Protection
We call for abolition of non-means-tested schemes, staggered subsidies for public healthcare and a deployment of the savings on a higher socal safety net and better healthcare. HK can't pursue a universal handout without breaching the Basic Law, and even if it could, the Laffer Curve may make it unsustainable as taxable profits and earnings would shift away. Finally, the MPF is a costly interventionist failure that should be scrapped, and if it is not, then LSP must be phased out to allow full portability of MPF assets. (21-Jun-2016)
SEHK tackles bonus issues, misses the obvious
The Stock Exchange, in a guidance letter tonight, says it will reject listing of bonus issues of 200% or more, because they tie up too much of the float between the ex-date and distribution date. They propose stock splits as an alternative, but they omit the faster and better way to reduce board lot value, which HKEx itself used in 2008. (27-Apr-2016)
HKEx cuts hit corporate governance of whole market
A circular slipped out by an HKEx subsidiary, HKSCC, will slash the effective voting window for general meetings, reducing the participation of institutional investors in important decisions such as acquisitions, connected transactions and dilutive share issues. We urge HKEx to rethink this deeply damaging move. (18-Apr-2016)
Ticket markets and Rugby Sevens finances
Put down your beer jug and take a look at two inter-related problems: the almost non-existent secondary market for event tickets in HK due to an anti-free-market law, and the finances of the Rugby Sevens, which is hoarding cash, underpaying for the HK Stadium, and expecting taxpayers to build another one for at least HK$33.5bn. (10-Apr-2016)
Submission on Electronic Road Pricing
Speak out! Put market forces to work on the roads. Read our response and then tell the Government whether you agree or not. Consultation ends this Friday, 18-Mar-2016. (12-Mar-2016)
One registration, two companies
Webb-site reveals how a UK company registered in HK and then swapped names with another one, which illegally kept the HK registration. That company is now a subsidiary of UK-listed Cobham plc. (7-Mar-2016)
Preventing cash shells
Webb-site proposes a new Listing Rule to prevent cash shells. The Cash Shell Test introduces equity discipline for existing companies and provides clarity for those proposing transactions and fund-raising. It should be welcomed by investors, regulators, issuers and their advisers. HKEx needs to build a proper sanitation system for this village rather than dig a new cesspit. (3-Mar-2016)
Lerado settlement could be worth $0.066 per share
Lerado has settled its dispute with the buyer of its core business, but fails to state what the positive impact will be on its income statement and net asset value. Webb-site estimates that it will add $255m of profit or $0.066 per share to NAV. (2-Mar-2016)
Tom Lee Music practices not fair play
We look behind an ICAC prosecution of music teachers and find bad practices at the tax-exempt Tom Lee Music Foundation, which requires its teachers to exclusively push products for Tom Lee Music Company. (28-Feb-2016)

Other news

SEHK may delist China Oriental (0581) in 6 months
SEHK, 27-Jul-2016
This threat can only hurt the public shareholders who own 7.9% and have had their investment frozen since 29-Apr-2014 on the grounds that the float is too small. At the suspended price, the public float is worth HK$269m, larger than in many other listed companies. Ironically, SEHK blames the company for "depriving shareholders of trading their shares". Look in the mirror, SEHK, it's your rule. Scrap it.
Carpenter Tan (0837) punts CNY86.5m on WMPs
Company announcement, 27-Jul-2016
The comb-maker says it has "idle funds" generated from operations and raised in the 2009 IPO. Comment: idle funds should be returned by special dividend, not hoarded and punted. The capital is guaranteed by CCB but the 3% "expected returns" are not and presumably depend on the performance of the underlying investments, net of fees. Investors don't need listed companies to make investments for them - they can do that themselves. Some 68% of the firm's net assets are in cash at 31-Dec-2015.
L & A (8195): AGM postponed due to forged proxy form
Company announcement, 27-Jul-2016
The former bubble stock remains suspended pending inside information. It crashed 91.6% on 6-Jul-2016.
FSDC welcomes green bond issued by Link REIT
HK Government, 15-Jul-2016
Comment: this is a classic piece of greenwash. It is just a regular bond which will be part of Link REIT's overall capital resources. What next - a Sukuk? Will the next Link REIT building be both "green" and Sharia-compliant?
China Inno Fin (0412) belatedly details investments at 31-Mar-2016
Company announcement, 13-Jul-2016
This follows a complaint by Webb-site to SEHK. The firm held 9.95% of China Smarter Energy (1004), 4.49% of Huarong (0993) and 1.34% of Carnival (0996), as well as having sunk HK$340.8m into Joint Global Ltd, the newest unlisted hub in what we call the "Chung Nam Network". It provides no details of this significant investment, which in our view should have been announced when made.
Hong Wei (8141) v Registrar of Companies
HK Court of First Instance, 13-Jul-2016
Only after the Companies Registry had begun a prosecution for failure to file a return of IPO allotments within 1 month, did the company apply to the court for an extension of time to the actual filing date, some 21 months after the IPO. Justice Jonathan Harris rejects the application.
HKSAR v Deborah Annells: reasons for sentence
HK Court of First Instance, 11-Jul-2016
The convicted thief and fraudster gets 9 years. She was earlier convicted of perverting the course of public justice, and the combined sentence is 10 years and 6 months. She could be released under supervision after 5 years and 3 months, including any time served.
CAID (0048) reveals the other shareholders of GEO Securities Ltd
Company announcement, 7-Jul-2016
This follows a complaint by Webb-site that CAID had failed to say who it was getting into bed with. This turns out to be Capital VC (2324), which is subscribing 29.997%. The remainder will be held by Ms Li Chui Ling, who currently owns 100%.
China Fortune (8116): resignation of Co-Chairman
Company announcement, 7-Jul-2016
This follows a complaint by Webb-site that, under the Articles of Association, the board can only elect one Chairman. It has had two Co-Chairmen since 5-Nov-2012. The Listing Rules also contemplate special duties for the Chairman which would not make sense if there were more than one.
CAID (0048) to subscribe 42% of stockbroker GEO Securities Ltd
Company announcement, 28-Jun-2016
A second, unnamed subscriber is taking 283.78m shares (27.997%) of the broker. The announcement also fails to disclose who will own the remaining 30.003%, instead just naming the manager, Francis Lun Sheung Nim, who is often quoted in the media.
China Opto (1332) discloses the junk held by Win Wind Capital Ltd
Company announcement, 28-Jun-2016
This follows a complaint filed by Webb-site on 23-Jun-2016 that the Major Transaction circular, which was presumably vetted by the Stock Exchange, failed to include any information on the underlying investments held by Win Wind Capital Ltd, with which China Opto is engaged in a share swap. Several of the stocks are in what we call the "Chung Nam Network".
Previously on Webb-site.com
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