CK Life sees modest gains on debut


Critics suggest billionaire Li Ka-Shing's name is CK Life's only selling point

By Ravi Hiranand

HONG KONG, China -- Shares in tycoon Li Ka-Shing's biotech company, CK Life Sciences, rose 7.5 percent Tuesday on its debut, to HK$2.15 per share.

The initial public offering was well-watched given the backing of Hong Kong's richest man. The company said the retail portion of the IPO was more than 120 times oversubscribed.

CK Life sold 1.3 billion shares, raising HK$2.6 billion ($333 million) on Hong Kong's secondary GEM exchange.

It was the most actively traded stock in Hong Kong this morning. But the stock's first-day pop hasn't come close to that of Li's Internet firm, Tom.com.

Also massively oversubscribed, Tom.com sold at HK$1.78 on its debut in March 2000 but immediately hit HK$8, before peaking at HK$15.35 a week later.

Questionable value

Tom.com's gains came during the dot.com boom. Fund managers warned against expecting a big profits with CK Life because the market was in a selling mood.

There are also doubts about CK Life. Some investors have questioned the value of the company because it has little revenue and warned that it will not turn a profit for several years.

CK Life only has one product on the market, the fertilizer NutriSmart. It lost HK$57.93 million last year.

This has led critics to suggest that CK Life has little going for it other than Li Ka-Shing's name.

Strong family name

That can be enough in Hong Kong, where the Li name touches most industries, often dominating. Demand was particularly strong from retail investors, sources said ahead of the offering (full story).

The tycoon's rise from humble beginnings to become one of the richest men in the world gives Li and his flagship Cheung Kong Holdings an unmatched reputation in the region.

"They have very good track records in Hong Kong, they seldom disappoint investors," Francis Leung, Asian chairman for Salomon Smith Barney, said last week. SSB underwrote the offering.

Li's son Victor is chairman of CK Life. "We're seeing the shares trading up," Victor Li said at the stock exchange.

Hang Seng falls

The company's performance came despite the Hang Seng Index losing 1.51 percent today, closing at 10,421.49. Asian stocks in general sold off on Tuesday (Asia roundup).

The Bank of China Hong Kong has cleared one cloud ahead of its IPO, with a victory in a New York court (full story).

It is preparing a high-profile, $3.2 billion offering in Hong Kong later this month.