Geely Auto’s shares soar by the most in two months in Hong Kong after announcing plan to raise funds in Shanghai’s Star Market
- Geely’s shares rose by as much as 7.6 per cent in Hong Kong after the board approved the plan to sell new shares on the Star Market
Geely’s shares jumped by as much as 7.6 per cent to an intraday high of HK$12.80 in Thursday trading, the biggest intraday gain since April 17 before ending the day at HK$12.60. The plan to float shares on the Shanghai Science and Technology Innovation Board, or the Star Market, was approved by the company’s board of directors, the company said in a statement to the Hong Kong exchange.
The size of the offering will represent no more than 15 per cent of Geely’s enlarged share capital and the proceeds will used to expand business development and replenish working capital, according to the statement. The proposal is still pending approvals by shareholders.
Geely, based in eastern China’s Zhejiang provincial capital of Hangzhou, is one of the Chinese companies trading on the offshore markets adding home listings after policymakers started the Star Market in July to initiate a slew of reform measures, including no caps on pricing shares on the primary market and a wider daily trading band on the secondary. The Shanghai Stock Exchange is now reviewing the application for stock sales by Semiconductor Manufacturing International Corp. (SMIC), China’s biggest chip maker.
Infographic: Global carmakers and their venture partners in China
The Star Market hosts 112 companies currently, boasting combined market caps of 1.76 trillion yuan (US$248.3 billion) and an average price-to-earnings ratio of 81 times, according to the Shanghai exchange.
Citigroup raised the share-price estimate of Geely by 20 per cent to HK$20, citing that the share sales plan will boost the stock price and valuation. Its shares closed 5.9 per cent higher at HK$12.60 on Thursday. The stock is still down 17 per cent this year as the outbreak of the coronavirus epidemic crippled production and deterred buyers.
Li Shufu, the Chinese entrepreneur who built Geely from its humble beginning as an assembler of refrigerator compressors into one of China’s largest carmakers - with a number of marques in its portfolio including Sweden’s Volvo, Malaysia’s Proton, Lotus of the UK and the largest stake in the German carmaker Daimler - has accumulated personal wealth worth US$12 billion, ranked the 22nd richest businessman in China, according to Bloomberg data.
