Country Garden IPO gets warm response

The initial public offering (IPO) of South China property developer Country Garden is creating a buzz in Hong Kong, reflecting strong demand for mainland shares in the local stock market.

Analysts estimated the firm will receive total subscriptions of HK$300 billion. Country Garden sells many of its houses to Hongkongers.

The company's retail offer kicked off last Tuesday and will finish today.

Margin financing, or borrowing money to buy shares, hit a total of HK$50 billion on the second day of the retail subscription period.

Market watchers expect the retail tranche may be 200 to 300 times oversubscribed.

Country Garden's shares will begin trading on the Hong Kong stock exchange on April 20. It will sell 2.4 billion new shares, or 15 percent of its enlarged share capital, in a bid to raise HK$10 billion to HK$12.9 billion. The indicative range is set between HK$4.18 and HK$5.38, representing 16.7 times to 21.5 times its forecast earnings for this year.

Local tycoons also showed interest in the company's shares.

Lee Shau-kee, chairman of Henderson Land Development, who is also known as "Asia's Buffet", said earlier that Country Garden is one of five mainland property stocks with good potential, alongside Guangzhou R&F Properties, China Resources Land, China Overseas Land & Investment and Agile Property Holdings.

Apart from Lee, business tycoons Robert Kuok, Cheng Yu-tung and conglomerates CITIC Pacific and Singapore's Temasek have also backed the company as cornerstone investors.

The offer will value Country Garden as the biggest mainland property developer listed in Hong Kong, with a market value of as much as HK$86 billion.

According to its prospectus, the company posted 1.67 billion yuan in net profit last year. It forecast net profit would surge at least 140 percent to 4.01 billion in 2007.

(China Daily 04/12/2007 page15)