Cheung Kong shockingly cancels Apex Horizon deals in Kwai Chung

Check out the reason behind it.

According to Maybank Kim Eng, CKH made an announcement yesterday after market closed that it will cancel the provisional contracts and S&P agreements of the hotel room units of Apex Horizon in Kwai Chung.

All deposit monies and partial payments will be refunded to buyers plus interest of Prime Lending Rate+2% from payment date until May 30th, as well as a HKD10,000 legal and other fee subsidy.

Here's more from Maybank Kim Eng:

The Securities and Futures Commission (SFC) has been investigating whether the sales constituted an offer to participate in a Collective Investment Scheme under the SF Ordinance.

CKH does not agree with SFC but decided to cancel the purchases. Of note, CKH separately sold all 360 units of the project in February in 2 days, with proceeds of HKD1.4b.

According to Land Registry and Centaline, 333 units of the project have been registered in March with total consideration of HKD1.18b.

We expect that share price of CKH will underperform other local developer peers in short-run, in reaction to the news. While the amount of HKD1.4b and subsidy amounted less than 5% of the group’s FY13 HK sales target of HKD30b, we believe that the negative newsflow on the matter will sustain in short-term, including but not limited to SFC’s possible further investigation, agency commissions on the transactions, buyers’ claim on developer, confirmors’ claim on secondary sellers, stamp duty payable etc.