China Property

Developers 'under no pressure' over IPOs

Property firms have other channels for fund raising, such as bond sales, say analysts

PUBLISHED : Saturday, 08 June, 2013, 12:00am
UPDATED : Saturday, 08 June, 2013, 3:39am

Mainland property developers have no immediate capital pressures despite their withdrawal from initial public offerings in the A-share market, analysts said yesterday.

They said the developers' liquidity position remained strong, bolstered by property sales and funds raised through bond issues.

State-owned Beijing Capital Land and Guangzhou R&F Properties were among the companies that have withdrawn from the China Securities Regulatory Commission's A-share IPO review, a Securities Times report said yesterday, quoting a list obtained from the regulator showing which companies had their IPO review terminated.

The regulator announced at the end of last month that 269 companies had withdrawn applications for an IPO this year.

A Beijing Capital Land spokeswoman said the company had withdrawn the A-share listing application and would re-consider the plan depending on market conditions. Guangzhou R&F declined to comment.

The securities regulator has frozen IPO approvals since December last year, as its former chairman, Guo Shuqing, called for stricter vetting of applicants.

Wilson Ho, a property analyst at the brokerage Core Pacific-Yamaichi, said the two Hong Kong-listed developers had no capital pressure, as they had other channels to raise funds, such as bond issues. Beijing Capital Land raised 2 billion yuan in a bond sale last year.

Linus Yip, a strategist at First Shanghai Securities, said bonds issued by mainland developers attracted investors' interest last year.

Although other fundraising channels were available, mainland developers were still keen to list in the A-share market as shares could be priced at a higher premium, Yip said, "and it's also good to have more fund-raising channels".

Ho said: "Strong property sales could also generate cash flow that helps strengthen their liquidity position."

Contracted sales of Guangzhou R&F Properties rose 24.4 per cent to 2.9 billion yuan in May from the same period last year, while Beijing Capital Land's contracted sales in May hit 1.05 billion yuan, an increase of 8.2 per cent from the previous year.

Shares in Guangzhou R&F rose 0.94 per cent to close at HK$12.84 yesterday, while Beijing Capital Land ended down 2.61 per cent at HK$2.98.