TIANJIN ZHONGXIN - LOCALLY SHARES TRADE AT DISCOUNT TO A-SHARES??

TIANJIN ZHONGXIN - LOCALLY SHARES TRADE AT DISCOUNT TO A-SHARES??

in this week copy of the EDGE

www.theedgemarkets.com.sg/sg/article/tia...new-town-development

SINGAPORE (Nov 18): Last month, township developer China New Town Development Co made a conditional cash exit offer of seven cents a share to holders of its Singapore-listed shares by way of a selective share buyback.

CNTD is also listed in Hong Kong. The company also offered existing shareholders the option of swapping their Singapore-listed shares for Hong Kong-listed shares.








The management of CNTD, in an interview with The Edge Singapore, said the Singapore delisting would reduce the company’s administration and compliance burdens while boosting liquidity and simplifying the shareholding structure.

Meanwhile, the Singapore-listed shares of Tianjin Zhongxin, a manufacturer of pharmaceutical products, are trading at one-third the price of the company’s Shanghai-listed shares. The locally listed shares closed at 80.5 US cents ($1.15) on Nov 16, or 12 times forward earnings. In Shanghai, the counter closed at RMB17.29 ($3.58), or 28.7 times forward earnings.

Tianjin Zhongxin’s shares in the two markets are not fungible, so investors are unable to buy shares in Singapore and sell them in China. The company’s local shares have actually traded at a discount for many years. But the recent delisting of CNTD offers some hope for a realisation of that value.

Tianjin Zhongxin’s business is broadly organised into two segments. The Chinese medicine segment produces Chinese pharmaceuticals sold under brands owned by the group. The Western medicine segment produces Western pharmaceuticals through joint ventures with foreign pharmaceutical firms. The company holds a 25% stake in the Sino-American Tianjin Smithkline & French Lab (TSKF) and a 20% stake in Tianjin Hualida Biological Engineering.

CIMB analyst Roy Chen notes that the dual listing is a “status symbol” for the group. He explains that “Zhongxin” is an amalgamation of the Mandarin words for China and Singapore. The Singapore Exchange is also where the group first listed, in 1997. It was listed in Shanghai only in 2001.

Chen also believes Tianjin Zhongxin has the potential to grow its earnings in the years ahead.

Could dual-listed Tianjin Zhongxin Pharmaceutical Group soon follow suit?

Read Issue 755 of The Edge Singapore which is out this week.