Developer's move to price its offering at a discount could see debut lift stock as China property sector regains momentum
Shimao Property Holdings shares are cheap enough to attract bargain hunters, meaning they could close above their initial public offering price in today's trading debut, even though the portion of the offer reserved for retail investors was only half-covered, brokers said.
The mainland developer, which is controlled by Shimao International chairman Hui Wing-mau, said yesterday that the retail tranche of its offering was only 53.73 per cent covered while the institutional portion was moderately oversubscribed.
Sluggish market conditions and a lacklustre retail response have prompted the developer to price its shares at the bottom of the range at $6.25 to raise $3.71 billion, thus some investors could consider them a bargain. Goldman Sachs and Morgan Stanley are arranging the share sale.
Kenny Tang Sing-hing, an associate director at Tung Tai Securities, said Shimao should close at or above the offer price on its first trading day, thanks to a recent across-the-board rally in mainland property stocks.
'Shimao's pricing represents about a 45 per cent discount to its net asset value [NAV], which is cheap compared with the current industry average of 30 per cent discount to NAV. The low valuation will grant support to the stock.'
