The asset and share swap deal between Chinese property portal SouFun Holdings and Chongqing Wanli New Energy Co is a strategy to get a better valuation through a mainland China listing, Bloomberg argues.
Bloomberg says SouFun's plan to switch its stock listing from the US to China follows similar moves by other companies such as Dalian Wanda Commercial Properties Co to achieve higher valuations on mainland stock exchanges.
SouFun is among a growing number of Chinese firms, notably developers, seeking higher valuations by moving their listing from New York or Hong Kong to mainland exchanges.
According to a document obtained by Bloomberg News, billionaire Wang Jianlin’s Wanda Commercial is asking investors to back an effort to take his Hong Kong-traded property company private and relist it in China.
Evergrande Real Estate Group Ltd. agreed to acquire a stake in a Shenzhen-listed entity, an acquisition that could signal Chairman Hui Ka Yan is also considering a similar move.
China-listed stocks trade at an average 139.4 times 2015 earnings, compared with 28.4 times for stocks traded in Hong Kong and 40.2 times for US-listed companies.
According to China Securities Co analysts led by Shanghai-based Chen Shen, SouFun’s valuation would be 40 times its expected 800 million-yuan profit in 2016, based on Wanli’s share price before the stock was suspended in August last year, Bloomberg says.
SouFun’s US-listed shares trade at 11.9 times 2015 earnings, data compiled by Bloomberg show.
As reported yesterday, SouFun, China’s biggest real estate web portal, is seeking to move its shares to the Shanghai stock exchange via an asset and share swap with storage-battery manufacturer Chongqing Wanli New Energy Co.
Wanli will use shares worth 16.2 billion yuan ($2.5 billion) to buy SouFun assets through its units. The proposal is pending regulatory approval.
Wanli also plans to raise 3.01 billion yuan through private placements to fund operations. It's shares surged by the 10 per cent daily limit to 36.40 yuan as of 2:39 pm, after they resumed trading in Shanghai on Wednesday.