Pelikan shares increase by 3.4 percent following news of its share swap with China Stationery Ltd, as Pelikan Hardcopy Production categorically denies a move to China.
Following the revelation that Pelikan
International has engaged in a share swap with China Stationery Ltd. that will see the Chinese office supplies company buying a 9.79 percent stake – comprised of 50 million shares – in the company, Pelikan has experienced a 3.4 percent rise in share value, reports the Edge.
However China Stationery shares had declined by one percent as of 10:02 on 23 October.
Although analysts state that the deal is a positive for Pelikan, it does not represent enough to offset the impact of falling revenues in Europe, said to contribute 85 percent of the group’s topline.
CIMB Investment Bank analyst Nigel Foo commented that the relationship with China Stationery will “take some time to bear fruit […] there’s no rush to turn positive on the stock and it remains an ‘underperform’.”
CIMB Equities Research elaborated, stating: “Our target price stays unchanged at 0.5 time P/BV (71 sen), its one-year average. Underperform maintained; potential de-rating catalysts include further deterioration in Europe,” according to the Star.
However CIMB Research added that “Pelikan should benefit from CSL’s strong distribution network in China and elsewhere in Asia.”
UPDATE: Pelikan Hardcopy Production has recently issued a denial that it is in talks regarding a possible move of production to China, or will be winding down the company and states that it seeks to continue to grow the company.