HK 第53部分; HKEX frustrations
Two examples of some of the weird stuff that happens on a regular basis with HKEX-listed companies, and... usually harms minority shareholders
I am often wondering… How in the world is it possible that controlling interests in HK-listed companies change hands at seemingly ridiculously low prices, …subsequently triggering a low-ball mandatory takeover offer on the minority shares?
Well, turns out I am not the only one. A shareholder in $1376.hk - Raffles Interior filed a complaint letter, accusing the controlling shareholder and the acquirer of shenanigans…
the Complaint Letter alleged that the complainant has information indicating that the actual price paid by Mr. Zheng Nenghuan for the 51% stake was approximately HK$63.6 million, and that approximately HK$30 million was paid outside the disclosed consideration (‘‘Alleged Understatement of Offer Price’’). The complainant’s information is that the HK$30 million was not paid by or through the Offeror in the ordinary way, but was instead settled by Huahan entities controlled by Mr. Zheng Nenghuan in the PRC, in multiple transactions made on 24 and 25 July 2025, shortly before the change of control was announced to the market. The use of PRC-based entities under Mr. Zheng Nenghuan’s control, and the splitting of the payment across several transactions over two days, were, according to the anonymous complainant, consistent with a deliberate effort to keep this portion of the consideration off the face of the disclosed transaction;
it was alleged that, if proven, that would mean
(i) the consideration disclosed in the offer documents was materially understated by roughly half,
(ii) the mandatory general offer price was correspondingly understated,
(iii) that would have deprived the accepting and non-accepting minority shareholders of the higher price to which they were entitled under Rule 26 of the Codes on Takeovers and Mergers and Share Buy-backs (the ‘‘Takeovers Code’’)
It is about time we get some proper investigations in all these share transactions by controlling shareholders! It is highly suspicious that controlling shareholders frequently dispose of shares at a deep discount to financial assets value (net cash, investment securities, investment properties, et cetera), alone. It makes all the sense in the world if there are side arrangements to compensate sellers for selling their shares at an artificially low price. All with the aim for the buyers of these controlling stakes to not having to offer a fair price to minority shareholders, in the subsequent mandatory takeover offer.
Further below, I provide another example of some of the weird stuff that is happening on HKEX, and that should be better addressed by the stock exchange operator. Minority shareholders deserve to be protected from these shenanigans.
In case you are wondering about the response at Raffles… naturally the accused denies all accusations…
In Mr. Zheng Nenghuan’s reply, he asserted that all the aforementioned allegations are entirely untrue, that the burden should not be on Mr. Zheng Nenghuan himself to prove a negative, and requested the Board to disregard the complaint.
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Central China Management
Ticker: $9982.hk
Share price: HKD 0.113, as of 2026/06/24
Shares outstanding: 4,638,617,028, after the impact of the recently announced capital raise
Market cap: HKD 524.1m, as of 2026/06/24 after the impact of the recently-announced capital raise
Net cash balance: RMB 2575.8m, as of 2025/12/31… and likely more now, if only due to the recently-announced HKD 69m capital raise
The stock of this property project (or construction) management service co (sometimes also translated as Central Plains Jianye) is super illiquid. So it does not say that much that it jumped 20% today on the news that the WU family / Joy Bright has continued to sell down its (previously controlling) stake in the company.
Still, interesting to see that the stock moved up while the recent share disposals of WU were done at lower prices (HKD 0.08) than the prevailing share price (HKD 0.097)…
Similar share price action also happened late April, when WONG Wing Hang Alex / King Link / King Global Investments increased his stake to a 25%-interest. I suppose investors have been anticipating a full withdrawal from WU, and an end to that share overhang, and… perhaps even a (mandatory) takeover offer from; WONG, who recently became the new top shareholder.
Substantial share transactions…
What I find very, very strange about WU selling shares at HKD 0.16, 0.10, 0.057, 0.08, et cetera, a piece… Why sell shares this low, if (on paper) there’s RMB 2.6bn in cash on the balance sheet, ie RMB 0.555 or HKD 0.64 in cash per share? Why not just take out some cash from the company if you need the money?!? Declare 1x or multiple x the stock price worth in dividends/share and be done with it!
DIVIDEND POLICY
Pursuant to the dividend policy of the Company (”Dividend Policy”), the Company intends to declare and distribute approximately 50% of the Group’s net profit for a given year as dividends to the Shareholders.
Just adhering to the stated 50% dividend payout policy should have already led to a RMB 0.006 dividend per share declaration for 2025 (already implying 6.7% yield on yesterday’s HKD 0.09 closing share price).
Balance sheet cash position, as of 2025/12/31…
Contingent liabilities, as of 2025/12/321…
Shares outstanding, as of 2025/12/31…
Actions by the (former) controlling shareholder and capital allocation decisions by the Board make little sense from the outside, raising a host of questions…
Are there hidden liabilities that justify WU selling shares at a discount of up to 92% of the net cash balance, alone?
Is the cash not really there?
Are there secret arrangements - like suspected at Raffles Interior - that provide additional compensation to WU, beyond the compensation in the share transaction disclosures?
Why did the company recently announce a HKD 69m capital raise (at HKD 0.09 per share, with entities related to ShoreVest Partners and Mr. Bai Xueren) if it already had a RMB 2.6bn net cash position?
Sources
2026/06/18 - Capital raise
Shareholders structure…
2026/04/10 - Annual report 2025
2025/12/19 - Completion of internal control review and Resumption of trading
