Thai Boon Roong Twin Tower names new partner
After last week’s ground breaking ceremony for the 133-storey, $3 billion-dollar Thai Boon Roong Twin Tower World Trade Center Project, the development has amassed further support from a Hong Kong-based construction company—albeit one that has experienced a sharp decline in its share price in recent months amid rumours of a sell-off and two banks withdrawing lines of credit.
According to the company’s website, Hsin Chong Construction Group Ltd., was appointed as the construction manager for the project under development between a joint-venture between Thai Boon Roong Group and Macau-based property developer Sun Kian Ip Group.
“As construction manager for the project, Hsin Chong will be responsible for coordination and supervision of works contractors, program control, commercial advice, monitoring safety and quality control, managing site logistics, as well as coordinating with consultants and the local authorities,” the statement read.
While the news resulted in a slight boost to Hsin Chong’s Hong Kong share price, the company has experienced a 27.5 per cent decline in the value of its stock over the last year. In March 2015, Hsin Chong’s shares were hovering close to HKD90 cents, significantly down from its current trading price of HKD63 cents.
While the giant project appears to be gaining momentum—one that if undertaken would account for around 15 per cent of Cambodia’s GDP—Hsin Chong has yet to make a public announcement on the stock exchange.
According to Eddie Lam, an independent stock/business investor in Hong Kong, the lack of an official announcement could be because the deal has yet to become legally binding.
“As the MOU is not legally binding, sometimes the investors will not trust the MOU until the actual contract is signed, especially for those small companies which may have previous experience of signing MOU but finally not executed,” he wrote in an email.
He added that according to HKEx listing requirements, a company may consider a “voluntary announcement.”
However, this includes a fair amount of risk if after the disclosure presents “false or misleading information to affect the share price,” he said.
Stephen Higgins, managing partner of Cambodia-based investment firm Mekong Strategic Partners, said that while an MOU is merely a statement of intent, it is generally easier to get out of than a legally binding agreement.
If the company “didn’t report [or] notify their exchange of this project [on the stock exchange], it would suggest that there is little substance to the proposed transaction.”
While Lam said such an announcement could boost shareholder’s confidence in a company with the news of a “flagship project” that bills itself as part of the tallest and biggest developments in the world, Higgins doubts these announcements would have a tangible impact.
“I [have] yet to meet anyone who thinks this project will come to fruition, so in that sense I wouldn’t expect it to have a major impact on local market dynamics,” he said.
The project is said to begin construction this year, and to be completed by 2019.
Hsin Chong Construction Group declined to comment on the specifics of the deal.