Because of excessive speculation, Hong Kong regulators suspended trading in IHD and two other companies, industrial arm Everbright International and electronics maker Everbright Technology, for two weeks. May. That's 68 times expected 1997 earnings. IHD is currently changing hands at more than 1,000 times 1996 earnings. Everbright International and Everbright Technology, which resumed trading June 10, are equally short on fundamentals and long on investor expectations. With the mainland operations not bound by financial-disclosure requirements, some wonder just how big the company really is.
Transparency is a concern in other areas.
When Everbright Holdings announced it was buying the Hongkong Telecom stake, it neglected to mention that it would use group-backed loans to pay for it. Zhu insists that Everbright will be doing everything by the book. The first thing China Everbright does in a new market is hire the best lawyers and accountants who know local commercial laws and accounting practices. Many of them educated in the West, these new-generation officials are seen as more savvy than the older cadres they replaced, some of whom were ousted for alleged corruption. IHD is planning an asset swap with fashion retailer Theme International Holdings.