Chinese School - Property firms seek?funds from stock market

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BIZCHINA / Center

Property firms seek?funds from stock market

By Hu Yuanyuan (China Daily)
Updated: 2007-09-17 10:26

The price of ST Jintai shares set a new domestic stock market record when
it increased nearly sevenfold within 42 trading days, jumping from 3.96
yuan (US$0.53)?on July 9 to 26.58 yuan on August 31.

The trigger for the skyward rise was the company's announcement that it
would sell 8 billion A shares to New Handsome Joint Group, Jintai's
largest shareholder, to acquire New Handsome Joint's real estate
business. That means Jintai will reshuffle its operations, and the
chemical and pharmacy manufacturer would reinvent itself to become a real
estate firm.

Related readings:

?New steps to control property market
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S imilarly, because of an asset injection from Hua Yuan, a Beijing-based
property developer, the price of SST Xingfu shares also underwent more
than 20 consecutive instances of growth.

"Because the regulator has very strict requirements for direct IPOs,
raising money through shell companies has become another useful option,"
says Li Wenjie, general manager of Centaline China (North China region).

Because money is the lifeline for real estate companies, many property
developers are striving to get their piece of the stronger-than-ever bull
market this year through initial public offerings, listings through shell
companies and placements.

While Sino-Ocean Real Estate Development Co, SOHO China and Longhu
Properties recently announced plans to float shares on the Hong Kong
bourse, some real estate firms listed on the bourse, such as R&F
properties and Shanghai Forte, are retreating to Shanghai exchanges.

Statistics show that listed real estate companies have raised 115 billion
yuan through placements and allotments this year, making them the most
active players in the capital market.

"The strong driving force behind property developers' intensive capital
operations is the new rounds of 'enclosure movements'," Li Wenjie says of
the process in which companies enclose land for development.

Among China's real estate firms, Poly is grabbing the most land
throughout the country. After acquiring lands in Shenyang, capital of
Northeast China's Liaoning Province, and Central Southwest China's
Chongqing for 770 million yuan in June, Poly grabbed another 11 land
parcels in seven cities in July and August, for which it paid 8.29
billion yuan.

Vanke, the country's largest real estate company, is also striving to
increase its land reserves. In July alone, Vanke spent 6 billion yuan to
take over several pieces of land in Beijing and Dongguan.

(For more biz stories, please visit Industry Updates)

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