Few market watchers would have been surprised that Agile Property Holdings priced its $3.15 billion offering at the top end of the $3 to $3.30 price range after the institutional portion of the deal was 22 times covered and retail investors subscribed for 240 times the shares allotted for them. However, retail investors' keenness for the initial public offering did raise some eyebrows, especially after their shunning of the $1.98 billion offering by fellow Guangdong-based developer Guangzhou R&F Properties in July. R&F's retail tranche failed to attract enough investors to cover it even once, and was forced to price the offer near the bottom of the range. However, the shares have since soared 150 per cent. One could argue that retail investors were trying to make up for their mistake by piling into Agile now, but with its higher valuation, the move does seem questionable. Agile's $3.30 price would value the stock at 12.2 times this year's earnings and 9.2 times next year's earnings, sources said. R&F was sold at about eight times its estimated net profit for the year. The hefty oversubscription of Agile's retail portion will trigger an automatic increase in size to 50 per cent of the deal from 10 per cent. This means the institutional order size relative to the allocated amount will double to 44 times, which could prompt fund managers to top up their holdings when trade starts on Thursday. Agile expects to post a 306 per cent surge in net profit to 936 million yuan this year, according to its offering document. The developer plans to pay a final dividend of 2.8 cents per share this year and aims to pay 35 per cent to 40 per cent of its profit as dividends in future.
