Land developer gets set for mainland IPO
- Source: Global Times
- [02:50 October 22 2009]
- Comments
By Cong Mu
Beijing Capital Land (BCL) said it expects approval for its A-share listing sooner than other Hong Kong-listed mainland developers, after it sent in an application to the regulators.
Liu Xiaoguang, chairman of the Beijing-based Hong Kong-listed real estate company, told a press conference Tuesday that BCL has submitted the application for its initial public offering (IPO) in the yuan-denominated A-share market to the China Securities Regulatory Commission, Shanghai Securities News reported.
"Based on how quickly we were given permission to issue bonds, I believe we will be able to get IPO approval faster than other companies," Kitty Cheung, head of Investor Relations (IR) of BCL in Hong Kong, told the Global Times on phone on Wednesday.
"Of course, the exact timing of the IPO should depend on capital market conditions," she added.
BCL became the first H-share property enterprise to have its domestic corporate bonds to go public by listing 1 billion yuan ($146.41 million) 5-year bonds on the Shanghai Stock Exchange on Wednesday. The coupon rate was set at 6.5 percent.
Twenty percent of the proceeds will be used to repay bank loans while the remaining will be used as working capital for project construction, development and business expansion, the company said.
Investors have a negative impression of the company because it failed to achieve its promised goals in the past, leading to low valuation of its stocks. So it is natural for them to look to the mainland corporate bond market as a way of generating capital, said a Hong Kong-based analyst who asked not to be named because of company policies.
An A-share listing is always preceded by such a bond issuance, the analyst said.
For the year to date, BCL has risen over 200 percent to close at HK$3.77 (49 cents) on Wednesday, about 25 percent lower than its peak in 2008.
"I have seen constant change ever since I have been here," BCL's Cheung said when talking about how BCL is trying to turn around its image. She said that the company set up the IR department recently to manage the investors' expectations, and that BCL's accumulative contractual sales from January to September reached 9.2 billion yuan ($1.35 billion), surpassing the full-year target of 8 billion yuan ($1.17 billion).
Based on the contractual sales we've already made, BCL is almost certain to achieve good results in 2010 and 2011, Cheung said, without providing detailed figures.
BCL's potential IPO will give a stronger boost to the developer's shares than its bond issuance because financing costs are lower, the analyst said.
However, the company faces long-term uncertainty because its projects in Beijing will be completed in two years, leaving it to rely on second-tier city developments to provide income, China Chengxin Security Rating said in a report on BCL's bond issuance.
