Caixin
Dec 19, 2019 08:45 PM
FINANCE

Shares in Poly’s Property Management Unit Jump 29% in Hong Kong Debut

Shares in Poly Property jumped nearly 15% in gray market trading ahead of its Hong Kong IPO.
Shares in Poly Property jumped nearly 15% in gray market trading ahead of its Hong Kong IPO.

Shares in property management company Poly Property Development Co. Ltd. jumped more than 29% on their first day of trading in Hong Kong on Thursday.

Poly Property, which split in 1994 from China’s fifth-largest property developer Poly Developments and Holdings Group Co. Ltd., is a state-owned company that provides property maintenance services in 148 cities in mainland China, as well as consulting on development projects.

Shares in Poly Property jumped 13.96% to 14.67% in gray market trading ahead of the company’s IPO on the Hong Kong Stock Exchange. It issued 133 million shares or 25% of its total equity at a price of HK$35.1 ($4.5) per share, reducing its parent company’s stake to 75%. That netted Poly Property HK$4.58 billion and valued it at HK$24 billion. Shares in the company rose to HK$41.85 at opening.

According to its IPO prospectus, 57% of the takings will be used for mergers and acquisitions to expand the company’s property management business, with part of the rest being spent on value-added business including “systems for digitization and smart management”.

Five cornerstone investors — GIC Private Limited, Gaoling Fund LP, YHG Investment LP, CCCC International Holding Ltd., and China Structural Reform Fund Co. Ltd. — took a combined stake of 7.5% of the company after the share sale. That stake is subject to a six-month lockup period, a way of controlling volatility.

 Read more 
In Depth: After Cash Splash, Mainland Property Developers Flounder in Hong Kong

In its early days of expansion, Poly Property mainly provided services for its controlling shareholder Poly Developments, according to its prospectus. More than 90% of its management business came from Poly Development at the end of 2016, but this had dropped to just over 40% in the first half of 2019.

Poly Property has a contracted management area of 455 million square meters (4.89 billion square feet), behind HK-listed Colour Life Service Group Co. Ltd., Vanke Service and Country Garden Services Holdings Co. Ltd.

Last year, Poly Property’s revenue reached 4.2 billion yuan ($599 million) with 68.8% contributed by its property management business. Of that business, services for residential housing contributed 2.3 billion yuan.

The company had total assets of some 3 billion yuan in the first half of 2019, and total liabilities of 2.1 billion yuan, giving it a debt ratio of 71.09%.

Contact reporter Yutong Lu (yutonglu@caixin.com)

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code