CHINA: PLAY!: State Owned Shares Disposal: cited example Baoshan Steel: Strong Overweight
Bloomberg is streaming the most recent news on the 42 domestic A-Share companies the Chinese Governement will allow to begin the floating of the respective non-tradeable state-owned shares into tradeable domestic A-Share Market shares.
The key company I will focus on is Baoshan Steel, my previous top pick for China stocks.
The announced plan will be approved at the August 12, 2005 shareholder meeting and will affect registered shareholders on July 22, 2005.
The key points are:
1) Parent Company: Baosteel Group: Offer 2.2 shares for every tradeable 10 shares to public shareholders registered on July 22.
2) Parent Company: Baosteel Group: For every 10 tradeable shares, will issue one European call warrant with exercise price at Rmb 4.5 and expiry of 378 days.
3) Parent Company: Baosteel Group: Until final approval on August 12, Baosteel will commit to buoying the price at minimum RMB 4.53 by initiating open market share buy backs at prices below 4.53 up to a total purchase amount of RMB 2 billion.
4) Parent Company: Baosteel Group: Remaining non-tradeable shares will not be publicly floated during next 2 years.
5) Parent Company: Baosteel Group: After 2 years, share sales for that year (third year from July 22) will not exceed 5% of the total outstanding shares and will not sell for less than RMB 5.63.
6) Parent Company: Baosteel Group: In three years the parent company will hold at minimum 67% of total outstanding shares.
PLAYS:
Long Position: Baosteel is buoying the price through control of outstanding shares. Eventual floating of non-tradeable shares is staged such that market will not be flooded and 2 years from now no additional shares will hit the market if share price does not climb above RMB 5.63.
Intraday Trade: As the 22nd nears their will be heavy activity on the stock as long postitions are taken for an upside pickup in price. Watch for price irregularities as the call warrants are introduced and look for closeable misprice points.
The key company I will focus on is Baoshan Steel, my previous top pick for China stocks.
The announced plan will be approved at the August 12, 2005 shareholder meeting and will affect registered shareholders on July 22, 2005.
The key points are:
1) Parent Company: Baosteel Group: Offer 2.2 shares for every tradeable 10 shares to public shareholders registered on July 22.
2) Parent Company: Baosteel Group: For every 10 tradeable shares, will issue one European call warrant with exercise price at Rmb 4.5 and expiry of 378 days.
3) Parent Company: Baosteel Group: Until final approval on August 12, Baosteel will commit to buoying the price at minimum RMB 4.53 by initiating open market share buy backs at prices below 4.53 up to a total purchase amount of RMB 2 billion.
4) Parent Company: Baosteel Group: Remaining non-tradeable shares will not be publicly floated during next 2 years.
5) Parent Company: Baosteel Group: After 2 years, share sales for that year (third year from July 22) will not exceed 5% of the total outstanding shares and will not sell for less than RMB 5.63.
6) Parent Company: Baosteel Group: In three years the parent company will hold at minimum 67% of total outstanding shares.
PLAYS:
Long Position: Baosteel is buoying the price through control of outstanding shares. Eventual floating of non-tradeable shares is staged such that market will not be flooded and 2 years from now no additional shares will hit the market if share price does not climb above RMB 5.63.
Intraday Trade: As the 22nd nears their will be heavy activity on the stock as long postitions are taken for an upside pickup in price. Watch for price irregularities as the call warrants are introduced and look for closeable misprice points.
posted by howa at
6/29/2005
