Webb：意馬 (585) 溢價過高現泡沫，股價跌９７％才算合理

15/04/2010 11:05
Ｗｅｂｂ：意馬（５８５）溢價過高現泡沫，股價跌９７％才算合理

　　《經濟通通訊社１５日專訊》獨立網上財經評論員 Ｄａｖｉｄ　Ｗｅｂｂ 於網上撰寫文章指出，留意到近期股價大幅上升的意馬國際（５８５）於供股上的問題，上周五已建議聯交所要求意馬向投資者就發行認股權證的事宜作出澄清。　　

Ｗｅｂｂ指出，意馬早前引入有「紅籌之父」稱號的梁伯韜及資本策略（４９７）主席鍾楚義的Ｉｄｅａ　Ｔａｌｅｎｔ入股，而意馬的股份進行１０合１之後，再進行１供４的供股計劃，每股合併股份的供股價為０﹒０７元，相等未合股之前的價格０﹒００７元，而昨日意馬的股價已升至０﹒２４２元，令供股價較現價出現高達９７﹒１％的折讓。　　

Ｉｄｅａ　Ｔａｌｅｎ除了會按０﹒０７元認購１８﹒８億股意馬股份外，亦有權再按相等價格額外認購９﹒８８億股，而１年之內可以再以０﹒０８元的價格認購１５億股。　　

再上其他投資者的認股權證，若全數行使的話，意馬需要發行７３﹒５８億股合併股份，按合併後股價２﹒４２元計算，意馬的市值相等１７８﹒１億元，但其備考淨有形資產則只有３﹒１９億元，故現時意馬的市帳率高達３３﹒２倍，溢價達１７２﹒７億元。　　

Ｗｅｂｂ認為，對即將加入的管理層來說，對淨資產出現折讓會較出現溢價更為合理，因此，股價最終應下跌９７％。
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Copy/paste from: http://webb-site.com/articles/imagibubble.asp

Imagi bubble
14th April 2010

Investors should beware of a bubble in the share price of Imagi International Holdings Ltd (Imagi, 585). The company is in the middle of a reorganisation; since last Friday (9-Apr-2010), the stock has been trading ex-rights, even though the rights issue is still conditional on shareholders' approval at a Special General Meeting to be held on Friday (16-Apr-2010). There is also a 10 to 1 consolidation (a reverse stock split) due to take effect on Monday (19-Apr-2010), if approved at Friday's SGM. The circular is here.

What some investors may not understand is that the rights issue is 4 new shares at HK$0.07 for each consolidated share held. That's equivalent to 4 pre-consolidation shares at $0.007 for each pre-consolidation share. Tonight (14-Apr-2010) the stock closed at $0.242, so the rights issue is at a 97.1% discount to the current, ex-rights share price. Adjusting for the rights issue, the stock has risen from $0.0338 last Thursday (the day before it went ex-rights), up 616% in 4 trading days. Turnover in the stock has been extremely heavy, with 6.67bn shares traded in 4 days, equivalent to about 185% of the current issued share capital. We haven't seen this much chaos since Asian Citrus. We did suggest to the Stock Exchange last Friday that they require the company to clarify the basis of the rights issue, but they haven't.

If you are confused by having two different ex-dates, then maybe that's the intent. As we have said before, allowing trading ex-entitlements, including dividends, rights issues or other distributions, before the distribution has even been approved by shareholders, is a recipe for disorderly and unfair markets. In our opinion poll last September, 85% of respondents agreed that this should be abolished, but it hasn't happened yet. They should have gone "ex" both the rights issue and the consolidation on the same day.

The rights issue is expected to comprise about 1.44bn shares, raising $100.8m gross. In addition, Idea Talent Ltd (Idea Talent, BVI) will subscribe 1.88bn consolidated shares at HK$0.07, raising $131.6m gross. Idea Talent is 60% owned by Francis Leung Pak To, who was MD of Peregrine Investments Holdings Ltd until it imploded in 1998, and 40% owned by Mico Chung Cho Yee, an executive director of PCCW Ltd since before it was PCCW. Mr Leung is also now back in business with Larry Yung Chi Kin, the hapless former Chairman of CITIC Pacific Ltd until it almost blew up in 2008 over forex losses, the police investigation of which is ongoing. Mr Yung, through CITIC Pacific, was one of the early backers of Peregrine.

Idea Talent may also subscribe up to 988m consolidated shares at $0.07, called "Top-up Shares" in the circular, within 45 days of completion of the main deal, such that its post-deal holding (including any shares it receives as a rights issue sub-underwriter) reaches a majority 52.5%. That would raise $69.16m (not $79m as stated in the circular). As if that wasn't enough, Idea Talent will also have an option to subscribe another 1.5bn shares at $0.08 within 1 year after completion of the first share subscription, raising $120m.

There are also a bunch of "Core Creditors" who have lent money to Imagi. Two of these are Cayman funds: the Trophy Fund (and its wholly-owned subsidiary Goodyear Group Ltd) and the Trophy LV Master Fund. Both are "managed" by Trophy Asset Management Ltd (Cayman), which is owned by Kenneth Hung Kam Biu (Mr Hung). The two funds are also "advised" by Winnington Capital Ltd (HK), which is owned 50% each by Mr Hung and his wife, Jocelyn Chu. The third creditor is Fortunate City Investment Ltd (FCI, BVI). FCI was wholly-owned by Mr Hung but he disposed of it to a secret "independent third party" in Nov-2009.
The creditors are owed a total of HK$241m, which will be settled by paying them US$9m (HK$69.75m) in cash plus 790m shares plus an option to subscribe 400m shares at $0.08 for 1 year after the subscription completes, raising $32m. The two Trophy funds hold about 18.2% of Imagi between them, but they have agreed not to take up any of their rights, nor to sell their rights, so these will be available for excess applications. Given the massive discount, there is likely to be a heavy over-subscription of those.

Bubble wrap
Let's wrap this up. If all of the Top-up Shares are issued, and all the options granted to Idea Talent and the Core Creditors are exercised (which is likely if the consolidated share price stays above $0.08), then there will be 7,358,759,190 consolidated shares in issue (p44 of the circular). At the current price of $2.42 per consolidated share, that implies a market value of HK$17.81bn. By comparison, the pro forma net tangible assets, shown in Appendix II of the circular, will be $318.8m, plus the proceeds of the Top-up Shares and Options, making $540m, or about $0.073 per share. So the market is implying 33.2 times book value, or a premium of HK$17.27bn (US$2.23bn). Given the huge destruction of shareholder value at Peregrine and PCCW, we think a discount to net asset value for the incoming management would be fairer than the premium. That suggests an eventual 97% downside from the current price.