UPDATE 1-Hutch Telecom soars 10 pct on spin-off news
(Updating share price, adds analyst comment)
HONG KONG, March 5 (Reuters) - Shares of Hutchison Telecommunications International Ltd (HTIL) (2332.HK) rallied more than 10 percent mid-morning on Thursday after it said it would spin off its Hong Kong/Macau assets to unlock value.
The stock hit a high of HK$2.34 before shaving the gain to HK$2.33 by 0308 GMT.
The emerging telecoms arm of Hutchison Whampoa (0013.HK) announced on Wednesday it had applied for a separate listing of shares in Hutchison Telecommunications Hong Kong Holdings Ltd and will be distributing the unit's new shares to HTIL shareholders as an interim dividend.
"The distribution of the Hong Kong telecom asset is a value realisation exercise. Although it will not create any value for shareholders, we believe it is an indirect way of returning cash to shareholders in an uncertain market. We believe this should help to support the share price at current levels," said HSBC Global Research in an early Thursday flash note to clients.
The distribution of the Hong Kong assets is supportive of the share price, the brokerage said, especially after the telecom firm announced a 97 percent slump in 2008 net profit.
The profit fall was especially steep compared with the year earlier level because of a HK$70 billion profit booked in 2007 from the sale of the company's India telecom assets.
Excluding the one-off items, the bottom line showed a loss per share of HK$0.12, which HSBC Global said was similar to its estimate.
Macquarie Research analysts said in a quick note after the results that the operating level figures were below their expectations. "However, overshadowing this are the details of the spin-off of the HK/Macaau operations. We believe this will be the more important share-price driver in the near term." (Reporting by Nerilyn Tenorio; Editing by Jacqueline Wong)
