Henderson Land Development Vice-Chairman Peter Lee, the son of property tycoon Lee Shau-kee, has been in preliminary talks with Shaw Brothers to buy a stake in TVB, the city's biggest free-on-air broadcaster. Provided to China Daily

Developer interested in Shaw Bros' land bank: Analysts

Henderson Land Development Company Limited Vice-Chairman Peter Lee, the son of tycoon Lee Shau-kee, is in preliminary talks with Shaw Brothers (Hong Kong) Limited to buy a stake in Television Broadcasts Ltd (TVB), Henderson spokeswoman Bonnie Ngan confirmed Monday.

Trading of TVB shares were suspended Monday morning amid rumors that Henderson Land Chairman Lee Shau-kee was in talks with Shaw Brothers to buy a 26 percent stake in TVB.

Equity analysts said that the confirmation of preliminary discussions between Henderson's Peter Lee and Shaw Brothers indicates that the Lee family is interested in expanding its land bank. Shaw Brothers, the parent of TVB, owns four pieces of property, including attractive sites in Sai Kung with the potential to be converted into luxury properties.

"The discussions have nothing to do with the two listed companies - Henderson Land and Henderson Investment Limited ," Ngan said. "Peter Lee is having a personal discussion with Shaw Brothers."

"Dr Lee (Lee Shau-kee) has never had a meeting or been involved in discussions." Ngan added. "Nothing has been confirmed yet."

TVB's share price rose by nearly 17 percent to HK$46.50 per share - its highest level since June 2008 - before trading was suspended. Henderson Investment Land shot up as much as 35 percent before closing up 25 percent at HK$0.90 per share. Trading volume surged to HK$447.88 million. Henderson Land closed 2.91 percent higher at HK$54.85 per share on volume of HK$591.29 million.

TVB also issued a statement Monday afternoon confirming the discussion, though it added that nothing has been agreed upon yet.

TVB applied to have its shares resume trading Tuesday morning.

"As neither Henderson Land nor Henderson Investment Land has any essential business running a television broadcast business, it is only natural to think that the Lee family is interested in Shaw Brothers' land bank," said Louie Shum, chief executive officer at Sincere Securities. "Land resources would supplement the future business developments of Henderson Land and Henderson Investment Land."

Mavis Hui, an analyst at DBS Vickers, said TVB, the larger of the two free-to-air television broadcasters in Hong Kong, could be an attractive buy given its positive outlook.

"TVB continues to stay in cyclical recovery for its core markets," she said "Moreover, advertising spending in Asia will likely grow further in the second half of 2010 and 2011 under normal market conditions and TVB should remain a beneficiary though its operations on the mainland will still need time to expand gradually."

"The surge in the share prices of TVB and Henderson Investment Land Monday is a reflection of market optimism," said Dickie Wong, research manager at Kingston Security Limited. "It will all depend on the actual agreement."

Local media reports said that Lee Shau-kee could pay up to HK$9.2 billion for the 26 percent stake that Shaw Brothers owns in TVB. The reports also added that Lee Shau Kee may inject the TVB stakes into Henderson Investment Land after the acquisition. With the jump in its share price Monday, TVB is now worth $2.2 billion, according to Thomson Reuters data.

China Daily

(HK Edition 09/28/2010 page2)