Wheelock sales may end Wharf's stellar rise
ROBERT HALILI
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Wharf (Holdings) stock has been on a run recently - but selling pressure by major shareholder Wheelock and Co could spell an end to that story soon.
Wharf has outperformed the market in the past three months, rising from HK$14.05 per share in October to $21.70 this month. It closed yesterday at $21.35.
Wheelock took advantage of the sharp rise by unloading 6.92 million shares from January 2 to 8 at prices ranging from $18.85 to $21.55 per share.
The shares sold accounted for 17.35 per cent of the stock's trading volume during that five-day period. The disposals trimmed Wheelock's holdings by 0.552 per cent to 1.24 billion shares or 50.82 per cent of the issued capital.
Investors should note that Wheelock has sold 10.71 million shares since Wharf announced its interim results on August 31 last year.
Wharf posted a flat 5 per cent growth in net profit to $1.11 billion for the six months to June 30 last year.
Wheelock's first disposal was made just a week after the results were announced, with the sale of 1.46 million shares on September 4 at prices ranging from $18.70 to $19.70 per share.
The group followed that up with the sale of 2.33 million shares on November 24, and most recently, 6.92 million shares from January 2 to 8. The sales will increase the number of Wharf shares freely available for trade, which could help it within the Morgan Stanley Capital International indices after they are adjusted later this year to take account of free float.
Heavy sales have also been recorded by non-executive director Jurgen Friedrich of fashion and cosmetics retailer Esprit Holdings this month.
Mr Friedrich unloaded 16.11 million shares worth $132.1 million from January 9 to 15. His average sale price of $8.20 per share was close to the stock's six-month high of $8.55 and yesterday's close of $7.90. Those were his first disposals since joining the company in 1997 and represented more than 56 per cent of the stock's trading volume during that five-day period.
The disposals were made more than six months after the group postponed the listing of European operations in June, citing poor market sentiment.
Executive director Peter Allen of Pacific Century CyberWorks picked up 40,000 shares at $4.60 each on January 12.
That was the second purchase by a CyberWorks director this month. Deputy chairman Alex Arena acquired 50,000 shares at $4.88 each on January 3.
Group directors have been buying since November. Two board members - Chang Hsin-kang and Peter Luk Kin-yu - acquired 49,000 shares from November to December at an average of $5.29 per share.
Substantial shareholder Pacific Century Regional Developments also bought 10,000 American depositary receipts, representing 100,000 shares, on December 14 at an average of $5.61 per share.
Despite the purchases by directors and a substantial shareholder in the past two months, the counter has fallen by 33.18 per cent from $5.65 on November 17 to the 52-week intraday low of $3.775 on January 17.
Much of the pressure has come from concerns that substantial shareholder Cable & Wireless would sell half its 3.25 billion shares after the expiration of the lock-up period on February 17. Cable & Wireless previously placed 1.04 billion shares on September 21 at prices ranging from $9.68 to $9.98 per share.
The shares have rebounded in the past two days - they closed at $4.625 yesterday - after chairman Richard Li Tzar-kai said that he would be assisting Cable & Wireless in placing the stake directly to another strategic investor, possibly a mainland telecommunications group.
Robert Halili is managing director at ScoreLab Asia.
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