Luk Fook (Hong Kong stock code 00590) rebounded 0.5% to HK$29.20, snapping its two-day 10.2% fall after its HK$1.36 billion top-up share placement.

Luk Fook (00590) issued an announcement to provide additional information regarding the share placement for over HK$1.3 billion. It is expected that the places and their respective ultimate beneficial owner(s) will be independent of and not acting in concert with the vendor, namely chief executive officer Wong Wai Sheung, and its concert parties. Assuming the placees do not hold any shares immediately before the completion of the placing and there is no other change in the shareholding, interest of Wong Wai Sheung and parties in concert will be diluted to about 44.69% from around 48.53% upon completion of the placing and will apply to the Securities and Futures Commission for a waiver from the obligation to make a general offer.

UOB Kay Hian cut its target price for Luk Fook to HK$48.5 from HK$52.7, but maintained its “buy” rating. It estimated that Luk Fook’s placement will have an EPS dilution of about 8%. As a result of the share placement, UOBKH cut FY2012-2014 EPS forecasts by 8%. However, the research house noted that Luk Fook’s sales momentum picked up again in December 2011 and there is sign of a pick-up in gold price again. It thus sees this as a buying opportunity especially after the stock price fell as a result of the share placement.