China Paper experiences sell-down after major shareholder unloads shares

China Paper was heavily sold down this morning after news was released that the largest shareholder, Sky Media was selling its shares in the company. Sky Media, which is controlled by China Paper's Chairman Mr. Chen Yong and MD Mr. Li Hanpu sold a total of 50 million shares yesterday which represents 12.5% of the company's issued capital. In addition, Mr Chen's wife sold about 13 million shares held by her. This sale is the second share offloading by Sky Media since the 20th March. It has also signalled the run up of the share price of the company. However, with the company expected to give its dividends this year, the share sale should probably represent a high price that the directors are willing to take. Based on the 2004 Annual Report, Sky Media should be left with around 25-28% of the company's share.

Kim Eng Securities issued a 'Sell' call as opposed to its 'Buy' call when the share was priced at S$0.37. The company's good fundamentals should be a good buy at prices below S$0.40 as it has a low P/E ratio as well as a good dividend yield.