Friday 28th January 2011

Dear Reader,

Two new articles:

NEW ARTICLES
CRE: more needed on the port flip
CRE (0291) has issued a bland denial that its parent owes it anything under the profit-share for the on-sale of its stake in Hutchison's ports. The calculation under that agreement in itself amounts to a connected transaction. We call for full disclosure of the apportionment of proceeds received by CRH, backed up by independent valuation of the other assets CRH bundled in. Without better information, we conservatively estimate a gain of $1,927m. The interests of CRE independent shareholders have not yet been protected. (28-Jan-2011)

Nagacorp controller's dealings
A recent court case highlights the dealings of Chen Lip Keong, controlling shareholder of Cambodian Casino firm Nagacorp (3918). Given his numerous outside interests, and the ongoing pledges of shares, investors should be concerned about how much debt he might be carrying and the risk that he may need to, or be forced to, sell part or all of his stake in Nagacorp. (28-Jan-2011)

RECENT ARTICLES
Ex-chaos trading: Zhongtian proves point
Zhongtian (2379) yesterday demonstrated why we should not trade ex-entitlements before they are approved by shareholders: a 10:1 rights issue at a 97% discount was vetoed. HKEx launched a consultation in December, and we need your support. We also repeat two outstanding problems which HKEx has failed to address, on expropriation of passive shareholders' value, and on the discounts on open offers. (27-Jan-2011)

Karce chairman extracted hidden fee
According to a judgment published today, when Karce (1159) sold a PCB business in 2008, the price was actually US$4m, not US$3m as Karce announced, and US$1m went as a "consultancy fee" to a company called Extract Group Ltd. And guess who owned Extract? We tell you, and call on the SFC and SEHK to investigate. (21-Jan-2011)

HPH Trust is no loss to HK
Singapore has invested over US$5bn in Hutchison's ports, so it is not surprising that HPH is listing there. We look at the other incentives, and the governance concerns for the Business Trust structure. We also ask why China Resources Enterprise (291) has not disclosed the outcome of its profit-sharing after CRH flipped its port stakes to HPH. (21-Jan-2011)

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