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Guangdong tycoon behind share listings of local firms

Guangdong tycoon behind share listings of local firms

Staff Reporter

2014-06-23

Timber tycoon Liu Shaoxi, founder and chairman of the Guangdong-based Yihua Enterprise Group, has been a key player behind the share listings of local companies from the southern region, reports Guangzhou’s Time Weekly.

Founded in 1995, Yihua alongside its subsidiary Guangdong Yihua Timber, was the first private business in Shantou city in Guangdong to launch a listing in Shanghai on Aug. 24, 2004.

In November 2007, Yihua’s real estate subsidiary completed its share listing, and became the first property company in eastern Guangdong to be publicly traded, the paper said.

Today, a total of 27 companies from Shandou and neighboring Chaozhou are listed on the A-share market, either in Shanghai or Shenzhen, and have a combined market value of over 110 billion yuan (US$17.7 billion).

While the cluster of businesses that have formed in the region are seen as the reason behind local companies’ interests in a share listing, the paper highlighted one characteristic of these companies —they often hold stakes in each other.

A local official told the paper that companies planning to list often sought advice from Liu and his brother, as they are seen as the “godfathers of capital.”

Yihua has owned stakes in four listed companies through various investment firms it set up in recent years. These four companies were telecoms giant Huawei Technology, Guangdong Taiantang Pharmaceutical, Guangdong Jinming Machinery and Shantou Dongfeng Printing.

Through its investment in these companies, Yihua owned a 9.48% stake in Huawei, 6.75% in Jinming, and 5.45% in Dongfeng at the end of March, but has sold its stake in Tianantang, the paper said.

Yihua is also linked to four of the nine companies that have completed preliminary disclosures for their public listing, either through the investment companies or because of a personal connection with Liu.

These four companies are Guangdong Guanghua Sci-Tech, in which a company represented by Liu’s son holds an 8% stake, Guangdong Songfa Ceramics, where Liu’s son is the third-largest shareholder, ceramics company Guangdong Sitong Group and home decorator Mingdiao, where the president’s wife is Liu’s sister, the paper said.

 

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KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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