Chinese investor now the biggest shareholder of Blue Diamonds

December 28, 2013, 5:31 pm 

A Chinese national here on vacation had within a fortnight bought into Blue Diamonds Jewellery Worldwide PLC becoming the company’s single largest shareholder.

Capital Trust Securities Limited, a Colombo based broking house, made a disclosure to the Colombo Stock Exchange on Friday regarding the purchase of nearly 8.5 million voting shares of Blue Diamonds by Mr. Xia Liquiang last Tuesday.

There was no word on the investor and his background and very little was known on whether he was making a pitch for control of the company which once owned one of the biggest diamond processing factories in the world.

It was then controlled by the Ceylinco – Seylan Group of Mr. Lalith Kotelawela.

With this acquisition the investor who did the transaction on the internet has increased his shareholding in the company to nearly 18.5 million shares amounting to 17.88% of Blue Diamonds voting ordinary shares.

Liquiang who has acquired his total stake in the company within a period of two weeks paying Rs.3.50 to Rs.3.60 per share which is above the Rs.2 net asset value per Blue Diamond share.

Analysts said that although Blue Diamonds is a loss-making company with accumulated losses in its books, it had a value as a listed entity as it could be used as a vehicle for other businesses contemplated by an investor.

Also some analysts see possibilities in its jewellery manufacturing business.

During the first half of the current financial year, Blue Diamond’s turnover was down 41% to Rs.29 million and it closed the first half of the current year with a loss of Rs.5.8 million against a loss of Rs.9 million a year earlier.

Blue Diamonds eliminated accumulated losses of over Rs.900 million in its books for the year ended March 31, 2011 through a capital reduction strategy but continued to carry a retained loss of Rs.59.6 million at the close of the year ended March 31, 2013.

The Blue Diamonds share, both voting and non-voting, is speculatively traded, mostly by retailers, on the CSE. The low price of the share is attractive to such traders.