Low Watson sale spurs sell-off in Hutchison shares
Stock suffers biggest drop of 5 per cent in two years after the disposal of the retail stake at a lower-than-expected price upsets investors
Hutchison Whampoa's shares fell 5.05 per cent yesterday in its largest drop in more than two years as the disposal of a 24.95 per cent stake in its retail arm to Singapore's Temasek last Friday was at a price lower than expected by the market.
The disappointment in the valuation saw the stock skid 5.98 per cent to a low of HK$100.60 before closing at HK$101.60 from HK$107 previously.
Hutchison sold the stake in AS Watson to the Singapore government sovereign fund Temasek for HK$44 billion. That translated into a market capitalisation of HK$176 billion, sharply below the nearly HK$200 billion valuation for the retail arm calculated by the market.
A special dividend of HK$7 per share was seen by some analysts as a negative gesture but welcomed by others.
"By paying a special dividend, the company is suggesting limited acquisition opportunities," a Morgan Stanley report said yesterday. The brokerage firm described the decision as "baffling".
Morgan Stanley downgraded Hutchison to equal-weight from overweight and lowered the stock's target price to HK$108 from HK$116.
