Chong Hing Bank Ltd. (1111), the Hong Kong lender partly owned by the Liu family, rose to a two-year high in local trading after Apple Daily reported that shareholders will send a signal they’re ready to sell.
Shares of Chong Hing rose as much as 14 percent to the highest level since February 2011, and traded at HK$21.30, up 12 percent, at the noon trading break. That brings their gain this year to 31 percent, outperforming a 1.6 percent decline since December in the city’s benchmark Hang Seng Index. (HSI) The Liu family may confirm its intention to sell Chong Hing, Apple Daily said today, citing unidentified people.
Takeover speculation has mounted since November, when Lau Wai-man was named chief executive officer to replace Liu Lit-chi, a member of the founding family who spent more than 50 years at the bank. Lau last month said Chong Hing is open to proposals from prospective buyers for all or part of the bank.
“Chong Hing can rise further as long as the acquisition talk remains, as it still hasn’t climbed back to its historic high,” said Francis Lun, a Hong Kong-based economist at GE Oriental Financial Group. “As the size of Chong Hing is relatively smaller, 1.5 times price-to-book may be the best it can fetch.”
Chong Hing is trading at 1.3 times its book value, data compiled by Bloomberg show. That compared with 0.77 times for Dah Sing Banking Group Ltd. (2356), 1.2 times at Bank of East Asia Ltd. and 1.3 times for Wing Hang Bank Ltd.
The number of publicly traded family-run banks in Hong Kong has fallen to four from six more than a decade ago after the industry drew buyers including China Merchants Bank Co. (3968), which paid $4.7 billion in 2009 for the Wu family’s Wing Lung Bank Ltd.
Chong Hing isn’t aware of any negotiations or agreements on the disposal of a controlling interest by its shareholders, the bank said today in a statement to the Hong Kong stock exchange. The lender doesn’t know of any reason for the increases in price and trading volume and isn’t aware of any information it needs to disclose, according to the statement.
Shares of Dah Sing gained as much as 3.9 percent to HK$11.08, the highest since June 2011. Wing Hang rose 1.8 percent, while Bank of East Asia rose 0.2 percent.
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