China Merchants Property's ambitious push to join the big leagues
Buying second-tier land, tripling sales and holding a 7 billion yuan private placement among mainland developer’s strategies to become a top 10 player
China Merchants Property has set its sights on becoming one of the sector’s top 10 players over the next few years, with a strategy that includes buying more land in first-tier and second-tier cities – although prices might pose a big challenge, a senior executive says.
China Merchants Property is the 12th-largest mainland developer in terms of sales and is targeting contracted sales of 100 billion yuan (HK$127 billion) a year by 2018, up from an estimated 40 billion yuan this year.
“[Mainland developers] are swimming in the same pool and will all catch cold if there is a virus, except for one or two strong swimmers,” board secretary Liu Ning remarked on the current market. “The company’s scale is an indication of its immune response.”
“We want to enter the top 10,” she said. “It’s difficult, as the threshold will be constantly pushed up.”
The developer has requested permission from regulators to raise 6.5 billion yuan (HK$8.3 billion) via a private placement, and Liu says they hope to receive a response towards the end of next month.
To fuel expansion, China Merchants last year bought a Hong Kong-listed shell company, Tonic Industries Holdings (renamed China Merchants Land) to serve as its overseas fundraising platform. It issued its first bond in Hong Kong last week, raising US$500 million at a coupon rate of 4.021 per cent.