domeet webmaster

Vanke (000002.SZ) is a simple announcement, but it has attracted many investors to watch.

This announcement of less than 600 words expresses two meanings: First, the board of directors of Vanke has passed a proposal to issue a H-share plan, and the second is the number of H-shares allotted in April this year. The regulations were revised.

This announcement was issued on the evening of November 13th. It only briefly explained the results of the review. It did not disclose the specific amount of the H shares and the price of the allotment. Therefore, it also caused doubts among investors: Vanke was not allotted in April this year. H shares? Is it necessary to issue H shares again? Is this a new issue?

Leju Finance has obtained a certificate from Vanke. “This announcement can be understood as a refinement plan for subsequent issuance. In the future, Vanke will decide on specific issues according to supervision and environment, and will announce it at that time.” In other words, Vanke New The H-share issue “Arrow” is already in the “string”, just waiting for the opportunity.

The HK$7.78 billion share placement big order

For housing companies, the issue of allotment is a long-term battle. Looking back at the first time that Vanke has issued additional H shares, it can be said that the long road is long and it takes a year.

On May 15 last year, the board of directors of Vanke reviewed and approved the proposal for the issuance of the H-share authorization for the first time. One month later, at the Vanke 2017 Annual General Meeting of Shareholders, the general authorization proposal for issuing H shares of the company was passed with a consent rate of 92.9%, but it was the lowest among the seven proposals.

At that time, Vanke’s board secretary Zhu Xu explained that Vanke’s Hong Kong H-share liquidity is very low, only 11.9%, more than 30 billion, so the market value is very small in Hong Kong stocks, liquidity is not particularly good, foreign big funds want to invest in Vanke H shares, suffering from poor liquidity, have repeatedly suggested increasing the liquidity of Hong Kong stocks.

Until April 4, 2019, Vanke announced that it had completed the delivery and successfully issued and issued a total of 262,991,000 new H shares to not less than six placees at HK$29.68 per H share. It accounted for 2.33% of the total share capital of the A+H Shares and the net proceeds from the Placing was approximately HK$7.78 billion.

The amount of financing of nearly 7.8 billion Hong Kong dollars is relatively rare in the equity financing of housing companies. This is the largest refinancing of Hong Kong’s capital market this year.

When Vanke, who is convinced of “focusing on convergence and doing a basic job”, will use this 7.78 billion Hong Kong dollar financing? Vanke said that it intends to net the proceeds from the placement.The amount is used to repay the company’s offshore debt financing and will not be used for residential development.

In fact, with the substantial increase in the liabilities of Vanke in the past two years, it has changed the previous relatively easy capital structure, and the allotment of funds can improve the company’s ability to resist risks, without increasing debt, and the cost is low, which is an excellent Alternatives.

The “window period” for allotment financing?

After completing the first additional issue of shares, Vanke once again tried to open the door to the issuance of H shares.

Before, Zhu Xu’s remarks at the 2019 shareholders’ meeting also gave the outside world a signal that Vanke will continue to issue additional H shares. She said that “the HKEx requires listed companies to circulate not less than 25% in principle. , we are far below this ratio, which leads us to a relatively low market value for a long time.”

Why did you choose to issue H shares now, Vanke did not respond in the announcement. However, in the eyes of the industry, in the current peak of debt repayment this year, and the current A-share financing environment has narrowed, the liquidity is tight, so that housing companies can try their best to finance from various channels. Vanke chose to go to Hong Kong for large-scale financing to deal with the winter of future real estate, which is also a reasonable move.

On the other hand, Bai Wenxi analyzed, “Which is the reason why Vanke frequently allocates shares, because it is more pessimistic about the market prospects, and it is not optimistic about the sales repayment and financing needed to support the performance growth. Allotment financing to prepare food and grain.”

According to the current stock market, is it now a “good opportunity” for allotment financing?

Huang Lichong, co-founder of Xielong Strategic Management Group, said that although it is not a good opportunity, it is an opportunity. A cycle is not a moment to return to the top cycle of real estate. Now it is the decline cycle of real estate valuation. In other words, Vanke does not have a rights issue now, and the valuation will be lower.

The shareholder is most concerned about the price of the allotment. “The increase price in April this year is still reasonable, but the current price is already moderately low, and it is not suitable for the current price increase. If the low price is issued, it will cause a big blow to the original shareholders. At present, Vanke has not announced the additional price, but according to the method of pricing based on the recent average transaction price, the price of this additional issuance of Vanke H shares is likely to be lower.

And such frequent issuances have also caused investors to question whether there are rights of dilutive shareholders. Bai Wenxi said, “The allotment financing is based on the proportion of the original shareholder’s equity, so it will not dilute the proportion of the old shareholders’ equity. Because the allocation of shares may need to consume cash and the cash holding status of each shareholder is different, so generally use Unallocated profits to distribute shares is easier to obtain through the shareholders meeting.”

But in the long run, the rights issue will expand the company’s share base and increase the difficulty of market value management. Therefore, allotment is a common form of financing, but it cannot be used without limit or endlessness.