Failed buyout bid takes shine off Glorious shares

Stock slumps 26.9pc after investors veto controlling shareholder's privatisation offer

PUBLISHED : Tuesday, 21 January, 2014, 1:10am
UPDATED : Tuesday, 21 January, 2014, 4:00am

Shares in Glorious Property plunged 26.9 per cent yesterday after shareholders vetoed the privatisation offer proposed by its controlling shareholder, Zhang Zhirong.

The stock finished the day at a three-month low of HK$1.25, down from the HK$1.71 close on Thursday, having slid to a session low of HK$1.20, which is within striking distance of its 52-week low of HK$1.08.

Zhang, who owns 68.4 per cent of Glorious, failed to gain shareholder support at the meeting on Friday after 62 investors voted against the plan and 58 others voted in favour, said the company's filing to the Hong Kong stock exchange.

Zhang, also the largest shareholder in shipbuilder China Rongsheng Heavy Industries, offered as much as HK$4.57 billion to buy out the outstanding shares of Glorious in October.

The stock surged to HK$1.74 when it resumed trading on November 22 after having been suspended between October 21 and November 21.

The company has 30 development projects across 12 mainland cities such as Beijing, Shanghai and Tianjin.

Total contracted sales amounted to about 7.3 billion yuan (HK$9.3 billion) for 2013, down 33.1 per cent from the previous year. Contracted area sold reached 577,154 square metres, a decline of 54.7 per cent.

Shares of mainland developers have been weighed down by a slowing economy and government measures to take heat off the real estate market.

Investment bank Barclays cast a dour note on the housing sector, pointing to tight monetary conditions for the economy, rising mortgage costs and home prices, and the slowdown in household income growth.

Barclays said in a report last week that the 21 developers on the mainland tracked by the bank reported moderate sales growth of 12 per cent year on year for December, although full-year 2013 sales jumped 29 per cent.

Although Barclays believes some developers may deliver sales growth rates of 15 to 30 per cent year on year in 2014, it expects the overall sales momentum will continue to slow.