The announcement pointed out that the seller, China Resources Group (Land) Co., Ltd. (a wholly-owned subsidiary of China Resources) and China Resources Land and the placing agent entered into this agreement to place a total of 200 million placing shares owned by the seller to no less than six independent transferees at a price of HK$ 33.65 per share.
China Resources Land pointed out that the net proceeds from the subscription were estimated to be about HK$ 6.72 billion. Among them, about HK$ 6.05 billion is used to purchase and develop land related to the Group's projects; Approximately HK$ 670 million is used for the general working capital of the Group.
The rights issue was unexpected to the market. Affected by this, China Resources Land closed at HK$ 33.3 per share today, down 7.88%. As a central enterprise, China Resources Land has always had excellent financial indicators. What is the reason for choosing the rights issue at this time?
Rights issue opportunity?
According to the announcement, China Resources Land will place 200 million shares in a new way, and it is estimated that the net raised funds will be 6.72 billion yuan. The proceeds will be used for the acquisition and development of land related to the Group's projects and the general working capital of the Group.
After the transaction is completed, the issued share capital of China Resources Land held by China Resources Group has been diluted from about 665,438+0.27% to 59.55%, and it is still the controlling shareholder of the company. However, this rights issue is equivalent to expanding the share capital by 2.8%, and the price of rights issue is 33.65 yuan per share, which is about 6.9% lower than yesterday's closing price of 36. 15 yuan.
The discounted rights issue put pressure on China Resources Land's share price today. As of today's close, China Resources Land closed at HK$ 33.3 per share, down 7.88%.
"Although this method can basically guarantee success, it is extremely lethal to the stock price. Those who are unwilling to pay extra money to raise funds will empty their shares before the placement, which will lead to excessive selling pressure and stock price decline, especially in the current market environment. " A private equity firm told the China Business Daily reporter.
This is an unexpected rights issue. Tong Mo published a report saying that the placement of China Resources Land was a bit unexpected, and that Rundi's current debt ratio was not particularly high, and there was no large-scale land acquisition recently. He believes that the rights issue is not used for special project development, but in response to the recent policy of encouraging state-owned enterprises to increase their equity and deleverage.
Although it is an "unexpected" rights issue, in the eyes of many people in the capital market, the timing of China Resources Land's rights issue at this time can be explained. "The stock price is high enough," a brokerage analyst who asked not to be named told the National Business Daily.
Since the beginning of this year, the share price of China Resources Land has been rising all the way. From 20 19 1.2 on the first trading day to the close of the trading day before the rights issue, the increase was about 24.68%, reaching a high of HK$ 37.5 last week.
"(High-point placement) is of course beneficial, the pricing can be higher, and the same number of share placements can raise more funds." The above analysts told reporters.
Large-scale purchase of land
From a fundamental point of view, the financial indicators of China Resources Land have performed well in the real estate industry. According to China Resources Land China Daily, the average financing cost in the middle of this year was 4.45%, and the net debt ratio was 43.6%, both of which were at a low level in the industry.
Since the beginning of this year, China Resources Land has also taken frequent actions in financing. On October 4th, 65438/kloc-0, Zhuo Lang Resources Co., Ltd., an indirect subsidiary of China Resources Land, entered into a loan financing agreement with the bank, with a total loan financing of HK$ 2.4 billion.
Prior to this, in September, China Resources Land obtained a loan financing of US$ 654.38 billion or equivalent RMB from a bank. Moreover, China Resources Land's Shanwei and Wenzhou projects have also started equity financing, which is rare for the stable China Resources Land.
Since the beginning of this year, China Resources Land has demonstrated its ambition for scale and become more active in the land market. According to the data of the Central Reference Institute, in the first nine months of this year, the amount of land acquired by China Resources Land was 63.7 billion yuan, compared with 59.9 billion yuan in the same period last year.
Tang Yong, Chairman of the Board of Directors of China Resources Land, also pointed out at the 20 18 annual performance conference at the beginning of this year that the land acquisition funds of China Resources Land will increase in 20 19, but a comprehensive judgment will be made according to the company's sales, cash flow and market expectations.
Affected by a large number of land acquisitions, the net debt ratio of China Resources Land is on the rise. As of June 30th, 20 19, the net interest-bearing liabilities ratio of China Resources Land was 43.6%, which was significantly higher than 33.9% at the end of 20 18.
This may be the motive of China Resources Land's rights issue financing. Even if China Resources Land can get lower-cost funds, equity financing is still the best solution at present. "The difficulty and cost of replenishing capital through equity are much lower than through creditor's rights," the above-mentioned capital market person pointed out.
It continued, "All developers are short of money, and Hong Kong stocks still have opportunities for equity financing. At present, both foreign currency debt and RMB debt (cost) have increased, and the channels are limited. (Financing) can only be in the form of rights issue. "
The reporter of National Business Daily asked China Resources Land about relevant issues, but no effective reply was received as of press time.