Evergrande’s perfect move, or a move too far?
Analysts divided on surprise purchase of 4.68pc stake in Vanke
China Evergrande Group’s surprise entry in the high-stakes battle for control of China Vanke is a bold step towards billionaire Hui Ka-yan’s property empire becoming the country’s largest residential property developer, according to some analysts.
But others say they worried that such investment could hurt the interests of Evergrande’s own stakeholders.
The Guangdong-based developer bought a 4.68 per cent stake in Vanke on Thursday, nearing the 5 per cent ownership threshold at which the company could request a seat on the board of the nation’s biggest homebuilder.
“Evergrande has always wanted to become China’s largest developer and Vanke’s chaos has provided it an opportunity,” said Chu Tongxin, a property analyst at Shenzhen Anji Asset Management, adding the stock purchase could allow it to grab market share from Vanke.
Evergrande was second among all real estate developers by house sales in 2015, after Vanke.
Vanke’s shares in Shenzhen soared another 6.5 per cent on Friday, after hitting its 10 per cent limit on Thursday, while Evergrande’s stock jumped as much as 5 per cent in Hong Kong.
“Evergrande is hoping to have influence in Vanke, and we expect this will eventually turn into a strategic investment,” according to a note by JPMorgan analysts.