Mission Hills puts share float idea on table
For golf resort operator Mission Hills the launch of two mega-sized property developments in Guangdong and Hainan next year could provide an ideal time to float its shares on the Hong Kong stock market.
The Post reported on Monday last week the world's biggest golf resort operator had been in talks with investment banks over plans to raise more than 1 billion yuan (HK$1.23 billion) by issuing yuan-denominated bonds in Hong Kong.
In a follow-up interview, chairman Ken Chu said on Wednesday that a share issue was another option for raising fresh capital.
'I will not reject the initial public offerings option. But it will depend on the timing,' he said.
As long as there are no big shocks in store for the market the right timing for a float may be when Mission Hills launches its latest two leisure property developments adjacent to its golf courses in Shenzhen and Haikou. The developments are slated for completion in December next year, but while total investment cost is projected at around 7 billion yuan, Chu believed their book valuation by the end of next year could be double that. 'Then, it could be the right time [for a share float],' he said.
While the company was exploring the idea of a yuan bond issuance, most of its capital expenditure to date had come from private funding and development loans, Chu said.
In Haikou, the group is partnering with Allan Zeman's Lan Kwai Fong Holdings to develop a 2 billion yuan retail-entertainment complex, named Mission Hills-Lan Kwai Fong. It is due to open next year, as part of a six billion yuan golf resort development, Mission Hills Haikou.
In Shenzhen it is investing US$800 million to build a 500,000 square metre hotel-office-parks-retail-residential development, named Mission Hills Centreville. The 220,000 square metre shopping mall in the Longhua New District will open by the end of next year.
Chu said revenues from the Mission Hills Haikou golf resort had exceeded revenues earned in Shenzhen in its second year of operation, and he expected the project to break even in five years. After the Mission Hills-Lan Kwai Fong complex was completed, the number of tourists would increase to 10 million, he projected.
To broaden its income source the group had added three new businesses to its operations, namely golf management, commercial development leasing, and wellness tourism. It had also signed management contacts with two golf courses in Yunnan and Chongqing.
'There are 700 golf courses in China and not all are managed properly or are profitable. Mission Hills will come in to help existing operators rebrand and reposition their golf courses,' he said, adding that the group would be willing to take over existing management or acquire equity in troubled operations.
'In winter about half of the courses close. Where do their members go to play golf?' he asked
'If their courses were managed by Mission Hills their members could play in our resorts in Haikou. Their staff could also work at our courses and we would pay their salaries.'