Shares of Great Eagle Holdings soared 12.19 per cent yesterday as investors speculated the company would hand out generous dividends after the proposed sale of the office tower and retail arcade of its Mong Kok property for HK$12.5 billion.
The stock gained HK$2.95 or 12.19 per cent to end at HK$27.15, beating the 0.53 per cent gain in the Hang Seng Index.
On Thursday, the company announced the sale of its Langham Place office tower and retail arcade to its 48.45 per cent owned Champion Real Estate Investment Trust.
The HK$12.5 billion price represents a discount of 11.8 per cent to the property's HK$14.7 billion appraised value.
Analysts said the proposed sale would help unlock Great Eagle's asset value and narrow the discount to its share price.
'The deal is positive for Great Eagle, if approved by Champion's minority shareholders,' said Lehman Brothers analyst Paul Louie. 'It also puts the company at a net cash position, offering scope for a special dividend.'
Great Eagle would be in a net cash position of HK$2.2 billion after the proposed sale and will probably return some of it to shareholders, as it did when Champion Reit listed.
