Your one of the only people on this message board that I listen to. Can you tell me what would happen
with our shares here in The United States if there is a dual listing? There is some speculation that if this happened, that LPH very well might IPO on the Hong Kong Exchange for 15+ and if so the stock here on the Amex would have to appreciate significantly, almost be identical to share price in Hong Kong, or at least within 5% of the Hong Kong Share price? If after dual listing, the share price on Amex is significantly less than Hong Kong share price, Arbitration would take place. Could you please
explain what are some scenarios that could happen to us, as American investors, if in fact a dual listing occurs.
I will tell you just my personal opinion. I do not believe the dual listing will happen. I rather believe taking private transaction is more possible and much more effective from Cai perspective. There will be no dual reporting requirements, no dual costs etc.
What is very important Cai did not benefit at all on being listed on US markets. He just diluted his share at below book value when financing for Gujiao was organized. He did not sell his shares on the open market so he did not make any money (did not monetize his shares) on being listed in US. LPH is typical local business so it does not need international PR recognition that may give US markets. Being traded at forecasted 2.7 P/E is a joke I would be mad if I were in his shoes - no benefits, no profits from being listed, just the costs and various requirements.
From his perspective it is much easier to take the company private, delist from US market and than relist in HK making app. 300% profit from that transaction. I do not know if Weitan PR company has experience in that kind of deals but something is telling me that taking private transaction may be in the cards what was slightly hinted by Toups durng cc when he said that many funds are caling about taking private option and he can not comment on this.
But anwering just hypothetically on your question. I strongly disagree with people claiming that LPh will list in HK at $15 while it is now traded in NY for $2.5. Will you buy oil in London for $120 per barrel while you can buy it for $85 in NY? The word is new really small, globalized and investment universe do not allow 500-600% arbitrage. That is really fairy tale to trust any fund will buy LPH at $15 in HK while it can be bought on another continent for $2.5 (just like I do trading from another continent). So I completely do not believe in dual listing magic effect.