A 400 pct Chinese broker premium begs explanation

Financial Street Securities

04/01/2018 08:44

(The author is a Reuters Breakingviews columnist.  The opinions 
expressed are his own.) 
    By Pete Sweeney 
    HONG KONG, Jan 4 (Reuters Breakingviews) - Fog is thickening 
around a missing tycoon's embattled empire. One holding of Xiao 
Jianhua's Tomorrow Holdings, Hengtou Securities, said nine 
owners will sell a stake to CITIC Guoan for $1.4 bln, or five 
times the market price. Such mysteries undermine Hong Kong's 
investor appeal.  
          
    Full view will be published shortly. 
    On Twitter https://twitter.com/petesweeneypro  
     
    CONTEXT NEWS 
    - Hong-Kong listed Hengtou Securities said on Jan. 2 that 
nine shareholders agreed to sell an aggregate 780 million 
domestic shares, representing 30 percent of the issued share 
capital of the company, to CITIC Guoan Group for 9 billion yuan 
($1.4 billion). Hengtou Securities is the business name of a 
mainland brokerage, Hengtai Securities. 
    - The price implies a share value of HK$13.90 each, 
according to Breakingviews calculations. Trading in Hong Kong 
closed at HK$2.81 prior to the announcement. 
    - Shares increased as much as 71 percent on Jan. 3, before 
falling back to close at HK$3.63. 
    - Hengtou Securities is only listed in Hong Kong. The 
transaction involves unlisted shares on the mainland, which 
cannot be converted into Hong Kong shares. 
    - The transaction requires mainland regulatory approval, the 
statement said.  
    -  For previous columns by the author, Reuters customers can 
click on  SWEENEY/  
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    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
Hengtou announcement    http://www.hkexnews.hk/listedco/listconews/sehk/2018/0102/LTN201801022702.pdf 
HK's Hengtou Securities hits near 2-yr high; CITIC Guoan buys 
shares     urn:newsml:reuters.com:*:nL4N1OY1GM 
BREAKINGVIEWS-Beijing spreads tension with Tomorrow selloff    
 urn:newsml:reuters.com:*:nL3N1JX1B8 
BREAKINGVIEWS-China's trophy case could become discount rack    
 urn:newsml:reuters.com:*:nL4N1KN18U 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Editing by Jeffrey Goldfarb and Katrina Hamlin) 
 ((pete.sweeney@thomsonreuters.com; Reuters Messaging: 
pete.sweeney.thomsonreuters.com@reuters.net)) 
 
Keywords: HENGTAI SEC CITIC GUOAN/BREAKINGVIEWS