Published March 4, 2009

Beauty China shares plunge 70%

By LYNETTE KHOO

	Email this article
	Print article
	Feedback

BEAUTY China Holdings shares nosedived to an all-time low yesterday on news that a potential buyer has approached its chairman and founder Wong Hon Wai to acquire his 38.57 per cent stake in the integrated cosmetics group.

Mr Wong, who is the single largest shareholder, owns about 137.5 million shares through his investment holding firm Lucky Gain International Ltd.

'The company has been informed that talks are currently taking place between Mr Wong and the potential purchaser,' Beauty China said in an announcement. 'Mr Wong has undertaken to keep the board informed of any material development in respect of such talks or when he makes a decision.'

Beauty China directors cautioned that there was no assurance that any transaction would materialise and advised shareholders and investors to exercise caution when dealing in the company's shares.

The news, however, sent Beauty China shares reeling after the trading halt that started on Monday was lifted yesterday afternoon. The stock price plunged a stunning 26 cents, or 70.3 per cent, to 11 cents with about 6.3 million shares traded for the day.

Dealers noted that while most acquisition news was positive for companies, this one was not. 'If the person selling off is instrumental in the group's business, the share price tends to fall because people are unsure who will be running the show ultimately,' a local broker said. When contacted, Beauty China's investor relations firm said there were no details yet on the potential buyer and the parties were still in discussion.

Beauty China, which was listed in 2003, swung into a net loss of HK$25.83 million (S$5.17 million) for the fourth quarter ended Dec 31, 2008, from a net profit of HK$39.61 million a year ago. Q4 sales rose just 1.1 per cent to HK$213.7 million.

For the full year, its net profit dropped 28.9 per cent to HK$115.04 million, hurt by the sluggish Q4 sales, a HK$42.4 million impairment of trade receivables and a HK$16.7 million impairment loss on land use rights. Its full-year sales grew 21.5 per cent to HK$768.5 million.