Registered on the UK AIM listings, with its shares having languished over the past 12 months, Prosperity’s owners are now about to jump aboard the HK bandwagon and aim for a separate listing there, which, say friendly analysts, could see its shares double, if the recent successful experiences of Asia Cement are to be repeated.
Prosperity’s recent $100m loan note issue, arranged by Morgan Stanley is seen as a precursor to a dual-listing in Hong Kong and recent fundraising activity in Asia suggests potentially huge upside for Prosperity’s shares.
At the time of its initial IPO, Prosperity was perceived as a high dividend yield stock but with limited growth but that apparently has all changed with the company announcing a number of acquisitions and new build projects earlier this year. At present Prosperity has interests in some 8.5Mt of Chinese capacity, this is scheduled to rise to over 14Mt by 2011 if all projects come to fruition.
Prosperity’s share price is actually down 15% since January. This weakness is even more surprising given the strong performance in Hong Kong-listed cement stocks. Morgan Stanley’s $100m loan note that incentivises Prosperity to achieve a dual-listing within the next twelve months could provide a catalyst for a sharp re-rating say the optimists.
However market timing is everything and others would argue that Prosperity has missed the current wave of enthusiasm for Chinese cement stocks. For example, China’s number one player Anhui Conch has seen its share price rise by over 50 per cent over the last 12 months, but its shares are now probably at a peak and could begin to slip back on the face of a more realistic assessment of the Chinese market over coming months. Betting on earthquake disasters to promote cement and construction stocks may be acceptable to market traders but its no way to build a longer-term business.