Hong Kong property

Chinese Estates builds 6 per cent stake in Evergrande as stock price quadruples

The value of the company’s shares in Evergrande, combined with Chan Hoi-wan’s personal holding, has surpassed its own market cap

PUBLISHED : Thursday, 19 October, 2017, 5:52pm
UPDATED : Thursday, 19 October, 2017, 11:07pm

Chinese Estates, a Hong Kong property developer, said on Thursday it has spent HK$12 billion in the past six months building a 6.2 per cent stake in China Evergrande, as the latter’s stock quadrupled in the same period.

At the same time, Chan Hoi-wan, an executive director of Chinese Estates and the wife of former chairman Joseph Lau, had informed the company she personally held 100 million shares in Evergrande as of noon of Thursday, according to a filing to the stock exchange.

The combined value of their total holding in Evergrande had surpassed Chinese Estates’ own market capitalisation as of Thursday’s market close.

Evergrande, which is China’s largest residential developer, jumped 5.6 per cent on Thursday to a fresh high, before erasing the gains and closing lower by 3.6 per cent at HK$29.2. Still, it has soared 500 per cent so far this year and 300 per cent since the beginning of April.

Chinese Estates fell 0.6 per cent to close Thursday at HK$13.5. Its market cap stood at HK$25.75 billion.

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Between April and noon on Thursday, Chinese Estates had acquired 819.5 million shares of Evergrande in the open market for a total of HK$12 billion, the statement said.

That represented 6.23 per cent of the total issued share capital of Evergrande by the end of September.

Chan’s shares took up about 0.76 per cent of Evergrande.

By aggregating the company’s shareholding, Chan is “deemed to be interested in” 919.5 million shares in Evergrande, about 7 per cent of the mainland developer’s total issued share capital, the filing added.

The shares were worth HK$26.8 billion by Thursday’s market close.

Chinese Estates cited “optimism” about the overall prospects of Evergrande, which develops large-scale residential properties and integrated commercial properties in mainland China.

A spokesman from Chinese Estates said the company had recorded roughly HK$14 billion of investment gains from its holding in Evergrande.

Nonetheless, he added, they will not “blindly” chase the stock, and may consider cashing in when the share prices reach “satisfying” levels.

With additional reporting by Summer Zhen