Ricacorp unveil plans to seek place on the main board
The move would see the rivals compete for investor attention as well as sales
Hong Kong investors may soon have a choice of property agencies in which to invest as Ricacorp Property unveils a plan to go public - possibly by the end of next year.
Its listing would blunt the edge afforded to Midland Realty (Holdings) by being the only traded property agency in Hong Kong - a position it has enjoyed for nine years.
Analysts said the desire to take Ricacorp - a company that is not under any funding pressure - to market was mainly being driven by an improved property outlook and the listing difficulties being encountered by its parent, Centaline Property Agency.
Managing director Ivan Ho said the firm, expected to earn more than $50 million this year, aimed to earn an annual profit of about $100 million as a listed entity.
'We will report profit for two consecutive years by this year and we need one more year to be listed,' Mr Ho said.
He said the company had formed a board of directors that ran independently of Centaline and owned more than 90 per cent of Ricacorp - thus satisfying one of the listing requirements.
Ricacorp, which has a market share of about 10 per cent by transaction value, would have boosted its number of branches from 80 to 200 and would be a listed firm within three years, Mr Ho said.
Centaline, which has a market share of 30 per cent by transaction value, is one of the two largest property agencies in Hong Kong. Its own listing has stalled as prominent shareholder Wong Man-yin, who holds more than 40 per cent of Centaline, disagrees with the plan.
Shih Wing-ching, chairman of Centaline, said the plan to list Ricacorp was mainly being driven by the smaller firm's management team.
'I am giving them a free hand, [Ricacorp's] expansion plan is not necessarily funded by listing; the agency is making enough money,' said Mr Shih, adding that the Ricacorp brand could benefit from being listed.
Mr Shih seems unconcerned by the growing competition between Centaline and its own subsidiary, which has focused on the luxury residential market since it was acquired three years ago.
'Competition is not necessarily a bad thing; it may actually stimulate businesses ... you can see that Centaline, which is not listed, has managed to become one of the largest agencies in Hong Kong even though our rival [Midland Realty] is a listed company,' Mr Shih said.
Eric Yuen, the head of research at Dao Heng Securities, said a listing of Ricacorp would not have a significant effect on the property market.
'Property agencies are not capital-intensive businesses. They're mainly driven by the property market and commission,' Mr Yuen said.
'Therefore, the listing is less likely to increase the agency's competitiveness in the market significantly.'
