China property

Chinese developer buys stake in China Sports to tap sports facility sector

China Aoyuan Property has offered to pay 3.3 billion yuan for the stake to make further inroads into the sports-related property development sector on the back of a booming sports industry

PUBLISHED : Thursday, 06 July, 2017, 4:55pm
UPDATED : Thursday, 06 July, 2017, 10:42pm

China Aoyuan Property said it has offered to pay 3.3 billion yuan (US$485 million) for an estimated 22 per cent stake of China Sports Industry Group , in a bid to tap into the country’s booming sports facility construction business.

The Guangzhou-based homebuilder said it has submitted the tender on Wednesday, at a price of no less than 17.53 yuan per share, according to a filing to the Hong Kong stock exchange.

In a separate statement to Shanghai stock exchange, China Sports said it intended to transfer 186 million shares, or 22.0733 per cent of the entire share capital. It said it had received one tender submission, which was from Aoyuan at the close of the tender.

Listed in Shanghai, China Sports, a governmental authority supervised by the General Administration of Sport of China, is mainly engaged in sports-related property development, construction and operation of sports stadiums. It currently has a market value of about 13 billion yuan.

Aoyuan, whose name translates into “Olympic Garden” in Chinese, had partnered with China Sports as early as 1997, when the two companies jointly developed Guangzhou Olympic Garden, a sports-themed residential project backed by the General Administration of Sport of China.

“With China Sports, Aoyuan could secure a lot of cheap land surrounding sports stadiums,” said Liu Feifan, a property analyst at Guotai Junan International.

With many Chinese cities vying to attract China Sports’ investments to build new sports venues to meet growing interests in sports, Aoyuan’s potential deal with China Sports gives it access to a huge market, he added.

The State Council has projected the sports industry to reach five trillion yuan by 2025.

Corporate investment flooding into China’s sports sector

Aoyuan said it planned to develop fitness and leisure facilities coupled with residential, cultural and commercial properties, which would also “lay the foundation” for its prospective development of a “sport town”.

With China Sports, Aoyuan could secure a lot of cheap land surrounding sports stadiums
Liu Feifan, Guotai Junan

If Aoyuan wins the bid, the transaction would still require the approval of the General Administration of Sport of China and the Ministry of Finance.

Aoyuan said it had paid a refundable tender fee of 50 million yuan.

Its shares in Hong Kong jumped as much as 6.7 per cent in morning trading, and closed 3.5 per cent higher to HK$2.95. China Sports slumped nearly 6 per cent to 15.02 yuan in Shanghai.

Liu pointed out that Aoyuan’s offer price for China Sports was on the high end, as it not only represented a 10 per cent premium to the last close price of 15.91 yuan, but that the company was already trading at over 200 times its 2016 earnings.

Aoyuan said the tender price was the weighted average price per share for last 30 trading days.

Founded in 1996, Aoyuan has developed over 100 property projects across China and has expanded its footprint to Australia and Canada.