Poly Culture opens strong on Hong Kong exchange
Auction house shrugs off impact from Beijing's corruption crackdown
Ray Chan and Bloomberg
Beijing-based Poly Culture - the first auction house to float in the city - made an impressive debut on the stock exchange yesterday.
Shares in Poly Culture, the culture and auction business unit of state-owned conglomerate China Poly Group, rose as much as 35.2 per cent before closing at HK$42.60 for a 29.1 per cent gain. The stock was priced at HK$33, the top end of its indicative range in the public offering.
Speaking at the listing ceremony at the exchange, Poly Culture chief executive Jiang Yingchun said the firm had not been affected by the mainland's crackdown on corruption and its listing status would help increase transparency.
"Our cinema business has been immune from the mainland's gradual economic slowdown since the demand for entertainment in first and second-tier cities has been growing steadily," Jiang said.
Mainland box-office takings, dominated by home-grown movies, rose almost a third last year to US$3.6 billion, according to official figures.
Poly Culture's share offering was well received by investors, with the retail tranche oversubscribed by more than 600 times.
The firm raised HK$2.56 billion from selling 77.78 million shares in the offering. Half of the net proceeds will be used to develop the art and auction segment and the rest to develop its cinema and theatre management business.
Ronald Wan, the chief China adviser at Asian Capital, attributed the surge in the share price to demand from retail investors on the strength of the parent company's reputation.
"Poly Group is well known on the mainland, though not for auctions," Wan said. "This is more related to the company's brand name and speculative elements."
Poly Group established Poly Auction, Poly Culture's main unit, in 2005. It is now the world's third-largest auction house, after Christie's and Sotheby's, even though its scale and presence lag far behind its two Western rivals.
In 2012, it was the mainland's biggest auction house, with sales of more than 700 million yuan (HK$887 million) and margins of about 70 per cent.
Citic Securities International and CLSA were the lead managers in the share sale.