Shares of Golden Wheel Tiandi, a Nanjing-based property developer, soared on their trading debut in Hong Kong yesterday, prompting more listing hopefuls to relaunch their plans for an initial public offering on the back of increasing appetite among investors.
The stock advanced more than 20 per cent to close at HK$2.04 yesterday after surging as much as 25 per cent at one point. In contrast, the benchmark Hang Seng Index dipped 0.1 per cent.
Founded in 1994 by Indonesian-Chinese Wong Kam-fai, the real-estate firm raised HK$756 million from selling 450 million new shares and pricing them at HK$1.68 each, near the top end of the offer range.
Apart from strong demand from retail investors, a significant surge in the share prices of small-cap companies provides little evidence of sustainable upward movement because underwriters may have stabilised the price moment on the first trading day, according to people familiar with the listing process in Hong Kong.
Like many listings of property developers, Golden Wheel, which develops residential and investment properties along the metro line in Nanjing, offered the shares at a deep discount, of more than 60 per cent, to its net asset value, reflecting the credit-strapped conditions among small and medium-sized property developers on the mainland.
CIFI, a Shanghai-based property firm, offered its shares at a 69 per cent discount to its net asset value last year.