Because Jay, all nightmares start this way, each and every time, driven by greed:
-----Original Message-----
From: Brook
Sent: Friday, May 03, 2002 2:43 PM
To: Mac
Cc: Jay; Peter
Subject: Re: Annaly Mortgage
Mac, Here I go again; I love it when my speculative juices get going. Here's a piece of commentary/research from last Tues. on Li Ka shing's IT manufacturing baby, 715;hk...Hutch Harbour Ring...
Dominic Lai (exec director of Hutchison and HHR) and Lewis Luk (exec director of Harbour Ring (toys manufacturing) ) met with analysts yesterday. Some people feel it's just a run-of-the-mill meeting. I don't think so. I think the co's future strategy is clearly set. The share price is up 17% this morning. Some say it's an injection story. I think it is not.
Highlights:
- HHR will become HWL's hi-tech manufacturing arm, shifting from toys to high-value add products such as telecom accessories. No injection of priceline.com, etc.
- Hi-tech products are expected to represent 60-65% of total revenue in the future.
- HWL will make use of its relationship to introduce big names to HHR
- I believe there will be soon co-operations between some Japanese telecom giants (NTT Docomo?) with HHR.
- Why? HHR is now 50.5% owned by HWL and 21% by the Luk family (toys manufacturing). 7 out of the 10 directors are from HWL. Canning Fok acts as the co-chairman of HHR. It's very clear that why HHR needs such a strong board of directors - cos it's going to do big businesses with the big names
- A Japanese from Hutchison Japan was appointed in HHR board last month. I asked Dominic Lai what Hutchison Japan does. He said it's a liason office with the big Japanese names, such as NTT Docomo. Isn't it clear?
- According to our Edison Lee, NTT Docomo + KPN have 35% stake and HWL has 65% in the UK 3G. HWL is planning to be the main driver of the 3G handset spec.
- Lewis Luk said we may be amazed by the business partners that HHR will be doing business with.
- Lewis Luk said HHR is doing the RF testing (again telecom related). I asked if HHR would buy people and technology to transform from a toys manufacturing to hi-tech production. Dominic Lai said it is a logical move (acquisition of Japanese technology then?)
- So, don't be surprised there will be technology transfer from some big names to HHR to utilise its manufacturing facilities in China to produce.
- Lot of imagination&. Many funds can't buy it now. But once the first piece of news comes out, I believe they have to buy.
- HHR has a book of HK$0.42/sh; net cash of HK$0.25/sh. Canning Fok bought 5m shs @HK$0.53 in early April.
- Toys production is of low-margin. Little profit of HK$80m right now, very high PE (53x?). Doesn't matter. The market is forward looking.
- No target price. It's totally up to the market and your imagination. |
