Softbank now has about 61% of Cheung Wah shares. The name will be changed to Softbank Investment International. Cheung Wah is an unprofitable garment maker, but Mr. Son wants to turn it into his bigass umbrella Net holding company in China, and will proceed to pack into that vehicle as many compelling Net plays as he can find. I strongly believe that his magic touch will grace Cheung Wah, and the valuation will soon begin a meteoric rise.
My logic is thus: someday, perhaps not so far away, Softbank China will be worth a minimum of 1/10 Softbank Japan. Current market cap of 9984 is approx $200 bilsky. Current market cap of Cheung Wah/Softbank Investment International/Softbank China is approx $1 bilsky. One-tenth of 200 bil is 20 bil, or a 20-bagger from today's price. I just put 5 percent of my port into Cheung Wah (HK 0648), at $1.80 (obtained through E*trade, under the symbol CWAHF).
Opinions please.
Yamakita
~~~
From Marketwatch:
Back-door listing in Hong Kong
Just as many in Tokyo are kicking themselves for not buying Yahoo Japan when it listed a couple years ago at around 2,000,000 yen, some Hong Kong investors might one day (soon) say: Remember when shares of Cheung Wah Development Co. traded at a mere HK$0.31 (roughly four U.S. cents)?
That was last week. The unprofitable garment maker's stock spiked 640 percent Thursday to HK$9.85, from the previous day's close of HK$1.35. The reason: a leak to the market confirmed. Japanese Internet supremo Softbank Corp. said it has agreed to pay HK$207.5 million ($26.7 million) for a 61-percent stake in Cheung Wah.
The rationale is straightforward. Softbank chief Masayoshi Son believes China will have more Internet users than the U.S. and Japan by the middle of the decade. Now he'll have a local, publicly traded fund-raising vehicle for his technology and Internet investments in the Middle Kingdom.
Shareholders of Cheung Wah must first approve the transaction, which would transform their company into Softbank Investment International (Strategic) Ltd. If a 640-percent spike in the share price weren't enough to convince them, they need only consider what's happened to shares of other majority-owned Softbank companies, like, say, Yahoo Japan. |
