Future Land, undeterred by lukewarm Hong Kong capital market, plans $2.54b IPO

Undeterred by tepid market, Jiangsu-based Future Land hopes to raise HK$2.54b

PUBLISHED : Monday, 19 November, 2012, 12:00am
UPDATED : Monday, 19 November, 2012, 4:13am


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Future Land Development, a property developer based in Jiangsu province, plans to raise up to HK$2.54 billion from an initial public offering (IPO) in Hong Kong, undaunted by the lukewarm capital market.

The company is offering 1.42 billion shares priced between HK$1.45 and HK$1.79 each. Final pricing is expected on November 28, with trading due to begin the next day.

"The condition of the market is one element to consider, but for us what is more important is [the IPO will help to realise] a sustainable development of the company," executive director Huang Maoli said.

At least five companies are poised to launch IPOs to raise more than a combined US$3.6 billion in Hong Kong this month, including Future Land.

To lure wary investors, Future Land is promising a dividend rate of "30 per cent of the distributable profit".

Last week, another mainland property developer announced a Hong Kong IPO at a price-earnings ratio of just four times next year's earnings. Shanghai-based CIFI is raising up to US$265 million by issuing shares that are expected to start trading on Friday.

Wang Zhenhua, founder and chairman of Future Land, said sales volume had been "gradually improving" this year, while sales prices maintained stable.

The company said the mainland property market had "palpably improved" in terms of sales volume and price, as Beijing had not adopted any new measures to cool the sector this year.

"Under such circumstances, the enthusiasm to acquire land among property developers is rising," Wang said.

Future Land said 90 per cent of the IPO proceeds would be used to increase land reserves through acquiring land parcels in cities where the company is operating now and also those where it might have projects in the future.

The company recorded contracted sales of 9.85 billion yuan (HK$12.13 billion) in the first eight months of this year, up 31.7 per cent from last year. It reported revenue of 10.77 billion yuan last year, 7.62 billion yuan in 2010 and 5.8 billion yuan in 2009.

With a focus on Jiangsu, Future Land also has projects in Hunan, Hubei and Zhejiang.