Hong Kong Has a Goldin Touch
Goldin Financial’s meteoric gains raise questions over what is fueling the rally
Goldin Financial’s fivefold share-price increase in the past year has made its owner, Pan Sutong, one of the richest men in Hong Kong.PHOTO: BLOOMBERG NEWS
Updated March 20, 2015 6:45 a.m. ET
Hong Kong’s stock market has become a factory for overnight billionaires. It is probably not the sort of wealth that will stand the test of time. The most prominent case is Hanergy Thin Film Power, a solar company whose meteoric rise and curious business model has made its founder, Li Hejun, the richest man in China, by Forbes’s count. Hanergy, under suspicion in local media that someone is manipulating the stock, issued a statement Thursday to explain the rally, attributing it to a number of factors, including bullish brokerage research reports.
Another company is nipping at Hanergy’s heels. Goldin Financial, controlled by Hong Kong businessman Pan Sutong, has risen fivefold in share price in the past year. Mr. Pan is now the fourth-richest person in Hong Kong, according to Forbes. Goldin is larger than the combined value ofBank of East Asia, Hong Kong’s biggest independent local bank, and Cathay Pacific,the city’s flagship airline. Mr. Pan’s other holdings include a company that is building a 117-story skyscraper, the tallest in northern China, ringed by the country’s largest polo complex.
Goldin Financial provides short-term corporate financing known as factoring. It also owns wineries in France and California, wine storage in China and invests in property. For this, it trades at 116 times 2014 earnings. Nearly all of its profits last year came from fair-value gains on a commercial building in the Kowloon Bay area of Hong Kong that is under construction. Strip that out, and its price-to-earnings ratio is more than 1,000. Continue reading