At its height on May 15, the company traded at a price-to- book ratio of nearly 25 times, compared with an average of about 1.5 times for stocks in the Hang Seng Index.
“The price is disconnected from reality,” said David Webb, shareholder activist and founder of Webb-site.com. “The stock is likely to have been manipulated, but I’m not pointing the finger at any particular party.”
Figuring out what Chinese companies are really worth is becoming a major headache for investors. When Li failed to show up for Hanergy’s annual meeting on Wednesday, the shares fell 47 percent in 24 minutes before being suspended. The stock had surged sixfold in a year to make the company more valuable than Sony Corp.
Dealing Cards
So what is Goldin Financial really worth? In his capacious Hong Kong office, furnished with generous touches of faux Louis XV marble and gold, Pan pauses from a game of solitaire and explains.
“It is important to understand the business behind it,” he says. First, the Hong Kong office tower will start generating cash next year, he says. Second, Pan has notified the stock exchange about plans to inject two massive wine storage facilities located in free trade zones of Tianjin and Guangzhou into the company, whose inventories will steadily increase in value as bottles in the cellars age.
“Goldin Financial wants to be the king of the wine business,” he says.
Third, is a factoring arm, which involves buying receivables from manufacturers at a discount. The business, which Pan describes as low risk and low return, will put the firm “into a different playing field,” he says, once it obtains a license to operate in Shanghai’s free-trade zone.
Property. Wine. Factoring. Who is this guy?
Cutting Classes