China Vanke sees shares rise 10 per cent on Hong Kong debut
Mainland developer keen to use the city's market to raise funds and attract investors
China Vanke shares jumped 10 per cent on its first day of trading in Hong Kong, and the chairman of the world's largest developer said yesterday it is in talks with strategic investors although it has no plans to issue new shares after listing in the city.
The stock opened at HK$13.66, up sharply from its closing price of HK$12.41 in Shenzhen on June 3 but the initial surge was eventually pared to close yesterday at HK$13.28. Most analysts rated Vanke as a buy and gave a price target above HK$15 per share.
Company founder and chairman Wang Shi told reporters the H-share float in Hong Kong and the delisting of its B shares in Shenzhen opened a fundraising channel for the firm and pried open a window for global investors to bypass mainland regulatory restrictions to invest in Vanke.
"Although we did not issue new shares to raise money, we can issue bonds here after we are listed [in Hong Kong]," he said. "The fundraising cost in Hong Kong is at least half below that in the mainland."
Wang added the company was talking to a few international strategic investors, but declined to reveal who they were and whether they would invest through share purchases in the secondary market or additional share issues.
"Those who have worked with us in the past for more than a decade will be considered first," he said, adding that over 85 per cent of its projects are now jointly developed with other firms, up from less than 30 per cent before 2008.
Wang said the downturn in the property sector might last two to four years and could eventually end up with a soft landing if the government allowed the market to correct itself.
"I always think consolidation is very necessary for China's property industry," he said. "To some extent, the correction since last year is an extension of the downturn in 2008 before the global financial crisis."
Back then, many developers were on the brink of bankruptcy, and the government relied on a 4-trillion yuan (HK$4.54 trillion) stimulus package to cushion the impact of the global financial crisis, but that in turn stoked the domestic property bubble.
The 30-year-old Vanke has managed to survive the market's ups and downs in better shape than its competitors. Now with its annual sales expected to hit 200 billion yuan this year, the company is focusing on the industrialisation of property development and constructing green buildings.
"We are a technology firm, with strong research and development centres," Wang said, illustrating the point by saying that Vanke now has 3,000 engineers comprising more than half its white-collar force. Some 15 years ago, more than a quarter of its 1,000 white-collar workers were sales people.