China Gaoxian's KDR PE rectified.

The Business Times reported today (29.01.2011) that China Gaoxian released inaccurate information to Korean retail investors.

They stated that their trailing twelve months PE was 86.

This was corrected to a PE of 4.3 on friday 28/1/11 causing a sudden rally in CGX's share price.

Article (29/1/11):

By Lynette Khoo
Singapore

China Gaoxian's KDR PE rectified - Its S'pore-listed shares rebound 4.7% after error on Korea Exchange website is corrected

China Gaoxian shares in Singapore rebounded yesterday as its Korean Depository Receipts (KDRs) sprang back with a vengeance after an erroneous price-earnings (PE) ratio on the Korea Exchange (KRX) website was corrected.

The KRX website had earlier stated that the KDRs were trading at a PE ratio of 86 times, a shocking number that China Gaoxian's group chief finance officer Raymond Wong said was a miscalculation by KRX. The website yesterday showed the KDRs trading at a more palatable PE of 4.33 times.

China Gaoxian shares in Singapore shot up 4.7 per cent to $0.335 yesterday, while the KDRs zoomed up 5.8 per cent to 5450 Korean won or $0.313 per underlying share since one KDR represents 20 shares.

China Gaoxian's historical PE in Singapoe is 5.86 times. Investors had earlier chased up the stock in anticipation of the KDR listing to an all-time high of 45 cents on Jan 10 but much of these gains has been erased after the counter's sharp fall on Tuesday following the dismal KDR debut.

"The Singapore shares were obviously affected by the Korean market because the shares are fully fungible," Mr Wong said.

He noted that investors in Korea also do not understand the business of the company well enough.

The group will undertake more investor relations (IR) activities in Korea and will soon appoint an IR firm there. Daewoo Securities Corp, the underwriter of China Gaoxian's KDR listing, will also be conducting more roadshows there, Mr Wong said.

"We will treat the Korean market the same as the Singapore market, giving the Korean market equal importance," he added. "Over time, we hope investors will better understand our company."

Reiterating why it chose the Korean market for the dual-listing, Mr Wong said the textile industry is a well-received segment in the Korean market, with textile companies enjoying a good average PE of 18.54 times, a number the group is confident of attaining.