Fri, May 16, 2003 - Page 11 News List

Li Ka-shing's tonic boosts CK Life

HEALTH FEARS Shares in the biotechnology company jumped after it offered to pay HK$2000,000 to anyone who catches SARS after drinking its tonic for 90 days

BLOOMBERG , HONG KONG

Hong Kong billionaire Li Ka-shing (李嘉誠) showed again this week that his name means money among investors in the city he helped build.

Shares of his three-year-old biotechnology unit CK Life Sciences International (Holdings) Inc leaped almost a fifth in a day as it began promoting an anti-SARS tonic it said Li, 74, had tested personally.

The health tonic, not yet on sale, is backed by a promotional offer that could virtually wipe out the first-time profit the company posted a week ago.

With the gain, CK Life shares have advanced by 26 percent since the profit announcement. Still, some investors say the surge owes more to marketing than a shift in the business outlook for the company, whose stock flopped below its initial offer price after it began trading last July with no profit record and just US$20,000 in sales.

"Li Ka-shing is jumping on the bandwagon" created by SARS with his VitaGain immunity booster, said Nitin Dialdas, an investment analyst at Richmond Asset Management Ltd, which manages about US$120 million.

"If they advertise it as a vitamin drink, and it's going to help your antibodies, people are going to buy it. The Li Ka-shing factor always helps," he said.

Victor Li (李澤鉅), the tycoon's elder son and chairman of CK Life, told reporters he and his father had taken VitaGain and "the effect is obvious," the Standard newspaper reported.

The company, which so far has sold only fertilizer, is backing VitaGain with an offer of HK$200,000 (US$25,000) to anyone who catches severe acute respiratory syndrome after taking the tonic for 90 days.

That garnered newspaper headlines in a city where 227 people have died from the disease, the highest toll of any city worldwide.

The offer, if claimed, would almost erase the HK$227,000 net income CK Life posted on May 7. That may be a small risk, though.

CK Life said it has no plans at the moment to sell VitaGain in China or Taiwan, where daily additions to the number of SARS cases are in double figures.

"We are afraid that our current volume isn't enough to serve many markets," said CK Life spokeswoman Susana Chan, who confirmed Li Ka-shing was one of 500 testers of the health drink.

CK Life is producing 100,000 units of the tonic a month, Chan said. She declined to comment on the selling price, expected sales, or whether the company has insured itself against the risk of having to pay out on its HK$200,000 offer.

The company has also said it will pay doctors' bills for anyone who catches a cold or influenza after taking the drink, which it advertises with the slogan ``VitaGain Means Immunity'' in a road-sign design whose diagonal bar strikes out the word SARS.

Some investors see a bright outlook for the company and VitaGain.

"This is going to be big in the future," said Bich Pham, who includes CK Life shares among US$300 million he helps manage at TAL CEF Global Asset Management Ltd.

"CK Life is after something which is quite specialized," he said. "The Western drug companies are too big and they are not interested in those things. So what CK life is doing makes a lot of sense. It's a niche for them."

Other fund managers, though, are leery of a company that's still in its startup phase and doesn't pay a dividend.

CK Life said on its Web site that it's applying for patents in the US for 101 of its products and has been granted seven.

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