China Vanke grabs largest stake in Huishang's IPO

HONG KONG -- China Vanke Co., China's largest property developer by market value, is set to be the single largest shareholder in Huishang Bank Corp. after it signed on as a cornerstone investor in the Chinese lender's Hong Kong initial public offering.

Huishang, which will begin taking orders from investors Tuesday, has secured about US$510 million of investment, or about 40% of the total offering, which could be up to US$1.3 billion, from five cornerstone investors, people familiar with the situation said Monday.

China Vanke has committed to US$400 million of the shares, which will be the biggest stake once the bank is listed, the people said. Vanke didn't immediately provide a comment.

Huishang, based in Hefei, Anhui province, is planning to sell 2.61 billion shares at between 3.47 Hong Kong dollars and HK$3.88. Cornerstone investors are usually guaranteed large allotments in IPOs in exchange for agreeing to hold the shares for a certain length of time. The price range represents 1.01-1.12 times of Huishang's 2013 first-half book value and 0.93-1.01 times of its full-year forecast book value, one of the people said.

Huishang is seeking to list on the Hong Kong Stock Exchange on Nov. 12. The bank couldn't immediately be reached for comment.

Property developers and banks typically have close relationships, because banks have historically lent money to such firms for land purchases and property development and always are involved in property launches, issuing mortgages to developers' customers. In recent years, however, as part of the government's campaign to rein in sky-high home prices, it has clamped down on credit for property developers.

Chow Tai Fook Nominee Ltd., an investment-holding firm controlled by business tycoon Cheng Yu-Tung, is another of the cornerstone investors, the people said. Mr. Cheng controls property developer New World Development Co. and jewelry retailer Chow Tai Fook Jewellery Group Ltd. Chow Tai Fook couldn't immediately be reached for comment.

Huishang has 199 outlets in 16 cities in Anhui province and in Nanjing, Jiangsu province. The bank reported 2012 net profit of 4.3 billion yuan (US$707.2 million), a 23% increase from 3.5 billion yuan a year earlier, according to investment banks' research reports.

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Slowly But Surely, the Tide's Turning For Vringo (VRNG)

Just for the record, I can't stand Vringo, Inc. (NASDAQ:VRNG). I've never agreed with its business model - litigation of patents that in retrospect probably shouldn't have been granted in the first place - and the investor hype that VRNG has surrounded itself with has largely obscured the truth and reality of its pivotal court case with Google (NASDAQ:GOOG).... a case that is now in post-verdict review, as the judge decides just how much money should be awarded. Yet, despite the fact that I'm anything but a fan of the company, I've got a funny feeling the stock's just a few days away from a major rally.

As those who've been following the Vringo story know all too well, though, there's more to it than just that, and "due process" has become something of a gray area as the matter finds itself in the middle of the court system, the U.S. patent office, and common sense. With all three forces already being blurred about where they stand, being caught in the middle of all three has just been absolutely maddening for Vringo, Inc.

Unlike most of the amateur journalists - and also probably shareholders - I don't come here to preach the merits of Vringo. Like I said above, I've found myself in the anti-Vringo camp more often than not. BUT, also like a said above, I've got a sneaking suspicion VRNG shares are on the verge of a monster-sized bullish move.

It's the shape of the chart that leads me to that conclusion. Slowly but surely, the post-verdict lull [the verdict from the suit against Google was handed down in October] has quietly been building into an uptrend. Actually, scratch that last statement. It's not an uptrend yet. I think it's going to be one soon, though. Here's why.

As you can see, since April, VRNG has made a string of higher lows. As you can also see, since March, Vringo shares have tested the 200-day moving average line (green) several times. Each brush of the 200-day average has promptly pushed the stock lower again. Additionally, as of this month, the stock's 20-day moving average line (blue) has crossed back above the 100-day (gray) and 50-day (purple). In fact - and this is the clincher - it looks like the stock is now, finally, finding support at those shorter-term moving average lines. The final clue we need is a move above the 200-day moving average line at $3.22, but given several months' worth of build-up, I'm pretty certain we'll get it. And once we do, it's off-to-the-races. Take a look.

Critics will be quick to point out that charts don't matter - fundamentals do. And in the case of Vringo, it's not even like the fundamentals matter, since there are none. The only thing really driving this stock is the promise of future settlements, or jury-awarded cash. I'll just say this - Vringo Inc. is one of those cases where the hype and buzz and speculation surrounding the stock has become far bigger than the company itself. In those rare cases, the chart reflects the ever-changing opinion of the stock's potential. Since it's opinion that's ultimately driving the stock's price, though, the chart suggests how public opinion is taking shape.... and will take shape in the future. (Sadly, human behavior is pretty predictable. This chart just puts that opinion on an X and Y axis, and shows us the brewing trend.)

Bottom line? If you wanted to take a swing on a long VRNG position, the odds are looking in your favor right now. If you wanted to wait until Vringo Inc. shares crossed above the 200-day moving average line - a reasonable reassurance - that would leave a little money on the table, but would reduce your risk quite a bit. Either way, the breakout's been brewing for a while, and I've got a feeling it's going to boil over soon... bullishly.

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