China Resources dropped 1% big line on short-term gains good light differentiation

The allocation of 300 million shares of China Resources, priced at the top of the benchmark price range of HK $14.34, today reversed a small dip in the market, which is now down 1.31% to 15.06 Hong Kong dollars and sold 330 million shares.　　And the big line in its disclosure of placing news on short-term gains good light differentiation. Citi issued a report saying it maintained the stock-buying rating of HK $17.14, a 14% per cent premium over market prices. The dividend will lead to a 4%-5% dilution of earnings per share in 2009-11, with little impact, but the net leverage ratio is below 30%. With the expansion of the capital base, the increase in cash and the strong contract sales, the CRC is expected to be more proactive in land acquisitions in the mainland market for the remainder of the year. And after the allotment, the parent company's share will fall (currently holding 67.2% per cent), laying the groundwork for future asset injections, while BOC International has downgraded China resources from buying to holding, However, the target price was raised from HK $12.4 to HK $15.3, narrowing the discount on the target price to net asset value, before discounting 28% per cent. The news confirms that the uncertainty over the placement of shares has been removed to further enhance the asset situation, but it is worrying that there will be more similar moves. Although the long-term prospects for China resources are still bullish, it is believed that short-term gains will be subject to a 15% per cent discount from the 2009 net asset value Outlook.