IAG 2006-06-07 Jun-Jul - page 6-7

7
outh agape,
Inside Asian Gaming
has been tracking the unrelenting ascent of
Melco International Development’s share
price. For much of 2004, Melco shares had
languishedataroundHK$1.20.Theexplosion
of Macau’s casino revenue from the second
half of that year thendrove theprice steadi-
ly up to HK$8.95 by the first trading day of
2006.
Whenmeteorsmake it onto institutional
radars, they usually gainmomentum. At the
start of this year, Citigroup issued a“buy”call
onMelcoshareswithwhatseemed likeanag-
gressiveHK$15price target.Thisheraldedag-
gressive fundbuying,andby June1 the share
MeteoricMelco
What goes upmust come down – but not necessarily all theway, and a higher ascent could follow,
especially if theworld’s largest financial institutions have anything to say about it
pricehadblasted toHK$21–endingup3.4%
on thedaydespite the company’s placement
of a further 63.6million shares,which techni-
callydiluted thevalueof theexistingshares.
Of course, it hasn’t all been smooth sail-
ing upwards. OnMay 22,Melco’s share price
dropped10% tocloseatHK$16.8as investors
took theHongKong stockmarket’s 508point,
3.1%drop thatday to takeprofit.But then the
ascent resumedon the news thatMelco and
its joint venture (JV) partner, Australia’s Pub-
lishingandBroadcastingLtd (PBL),were seek-
ing a listing on theUSNasdaq exchange be-
fore theendof theyear, inadealwhichwould
value the JV at more thanUS$6 billion – the
consensus is that theexpected20% listingof
the JVonNasdaqwill raiseUS$1-1.6billion.
Are the Bulls Biased?
Citigroup,CreditSuisseandUBSaresaid tobe
workingon the listingdetails for theplanned
initial public offering (IPO). That is a caveat
to Citigroup’s revised HK$23 target price
and Credit Suisse’s aggressive HK$30 target.
DeutscheBank,meanwhile,sees thepricego-
ing to HK$25. As the January issue of
Inside
AsianGaming
pointedout,when thebigboys
ofbankingcollectively issue suchbullishcalls,
their targetscanbecomeself-fulfilling.
M
Artist’s impression of City of Dreams
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