New World China Land seeks up to US$600m to realise assets
New World China Land was likely to invite strategic partners to take part in its proposed flotation next month, aimed at raising between US$500 million and $600 million, according to sources.
New shares of the New World Development (NWD) unit would be sold through a placement that would form part of the flotation, they said.
The plan also called for an initial public offering, they added.
Analysts said the listing was a move by NWD to realise some of its mainland investments accumulated since 1989.
'In the first several years, we did the preparation work,' NWD managing director Henry Cheng Kar-shun said.
'Our investments are now in the developing stage, almost close to the harvest period.' Among projects ready to provide profits are properties in Shenyang, Guangzhou and Wuhan.
Mr Cheng said New World China concentrated on low and medium-end housing market in the mainland, taking advantage of a housing reform focused on increasing home ownership.
However, analysts said investors had raised concern about the slow pace of housing reform.
Mr Cheng was unconcerned 'China's housing reform must go ahead, even though it will take one or two years before its goes smoothly,' he said.
'This is a potential market.' Mr Cheng said New World China's earnings remained small, but they would see a sharp jump in the next few years.
The company's earnings in the financial year to last June fell to $189.94 million from $209.09 million a year earlier.
NWD expects the unit's earnings this year to be at least $170 million.
New World China has 66 projects that will provide total floor area of more than 230 million square feet.
Many of the low-cost projects are low-cost housing projects subsidised by the government.
Mr Cheng said the company would not take on any new projects in this sector because Beijing had ended guaranteed returns for investors.
However, investment in existing government-subsidised housing would continue, he said.
Analysts said the response of the flotation largely depended on whether investors cast a vote of confidence in mainland housing reforms.
Dicam (HK) chief investment officer Ambrose Chang Chung-kwong said his company could take a small portion of shares in the flotation if it was sold at a 50 per cent discount to net asset value.