Tung Chee Hwa's shipping company, Orient Overseas International Ltd (OOIL) raised HK$1.21 billion ($155 million) via a top-up placement after Friday's close. With UBS once again as lead manager, the company offered 47 million shares at HK$25.75.
This represented a 6.3% discount to Friday's spot close of HK$27.50 and was slightly more generous than the company's last placement in September, which raised $66 million and came at a 5.6% to the company's then close of HK$15.80 per share. However, the earlier deal was smaller and completed at a time when investors believed the stock had a lot more upside potential than it does today.
As a result of the new deal, which represents 10% of issued share capital, the family see its stake diluted from 74.44% to 67.67%. It also equates to a fairly weighty 40 days trading volume.
Observers say there was not much overlap between investors that participated in both deals and a total of 72 accounts were reported in the new book. Prior to allocations, this had a rough split of 60% Asia and 40% Europe.
Over the past 12 months, OOIL has been one of the best performing stocks on the Hong Kong stock exchange, rising 603%. Year-to-date it is up 15.30%, but fell 8% last week in line with the rest of the sector, which was hit by concerns that Baltic freight rates are falling.
But specialists say the company still decided to tap the market because Friday represented its last market window before it enters a one-month black out ahead of end-of-year results. A number of analysts believe the stock does have some upside remaining.
Partly this is because it still trades at a slight discount to global peers, although this has tightened considerably over the past few months. Back in September, OOIL was valued at just over one times book compared to a global median of 1.5 times. It is now valued around the 1.6 times mark, versus a global average of about 1.8 times.
UBS has always been one of the most bullish houses on the stock and in a recent research report said, "While it is still feasible that OOIL might be further re-rated, we believe this is dependent on the outcome of freight rate negotiations for key axial routes, expected at the end of Q104."