Xu Rongmao And His Capital Steps

A+H plans to launch Xu Rongmao's redevelopment of Shimao property chess

In July 16, 2007, Xu Rongmao's 6 years of privatization at 0649.HK finally settled. It is understood that it has applied to the Hongkong stock exchange to cancel the listing of shares and was approved by the listing committee. Xu Rongmao will pay a total cost of 234 million yuan to 254 million yuan.

While privatization focuses on overseas markets, Shimao International, Xu Rongmao's restructuring of its H-share listed companies in mainland China's real estate business, Shimao real estate (0813. HK) and A share listed company Shimao shares (600823. SH) have long emerged.

Prior to June 7th, Shimao shares to Shimao real estate Affiliated Companies Peak Gain International Limited (referred to as "Shimao BVI (business)"), indirect wholly-owned Affiliated Companies Beijing Shimao Investment Development Co., Ltd. and the company's largest shareholder, Shanghai Shimao Enterprise Development Co., Ltd. with a share of 10.68 yuan, the private placement does not exceed 700 million shares. Among them, Shimao BVI has not subscribed for more than 558 million shares with its own 11 commercial real estate projects; Beijing Shimao subscribed no more than 72 million shares of its assets in Beijing Huaping mansion, and Shanghai Shimao subscribed no more than 70 million shares in cash.

This operation, through the world trade real estate holding world trade shares, changed the Shimao shares into "foreign investment joint stock companies", and solved the dark growth expectations of Shimao shares and incorporated them into the core assets of WTO. In addition, the increase in Shimao's high profit project reserves increased the possibility of WTO financing through A shares. In a short span of more than a month, Xu Rong Mao is using this to rebuild the popular A+H mode.

Three cart positioning awkwardness

Xu Rongmao's Shimao Group has three carriages: Shimao real estate, Shimao International and Shimao shares. However, for the three listed companies, the distribution of assets is very uneven, so we can use the word "two weak and one strong".

"Two weak" refers to Shimao International and world trade shares, which are listed on the same backdoor market.

Shimao International mainly develops the Suifenhe project in Heilongjiang and the Baltic Pearl project in St Petersburg, Russia. Shimao shares, the development and reserve projects include Shanghai Shimao lakeside garden, Fuzhou Shimao the Bund garden, Nanjing Shimao Binjiang new town, Kunshan Shimao mall and Shanghai metropolis project five major projects.

"One strong" refers to the listing of Shimao real estate in the past year. It owns most of the quality projects of the world trade group, has a luxurious lineup, and has 11 uncompleted real estate projects, including Shanghai landmark mansion Binjiang garden, Shimao International Plaza, Shimao Olin garden, Shimao Nanjing and so on. According to relevant information, as of June 2007, Shimao real estate reserve 20 million 800 thousand square meters, is a domestic real estate development enterprise.

Because of its preference for developing high-end projects in good quality lots, Shimao Group is destined to invest heavily in the early stage of the project. Since its accession, WTO shares have not been financed from the stock market. Similarly, Shimao International has a relatively small scale and relatively limited capital raising capacity. Xu Rongmao's original hopes to improve the world trade group's financial embarrassment were disappointed, so he had to find another way.

Xu Rongmao put his way on Shimao real estate. In July 5, 2006, Shimao real estate IPO upstream, at the lowest price limit issued to ease the crisis of its gold chain. And in order to put Shimao real estate packaging on the market, Xu Rongmao reclassified the business to make a listing for Shimao real estate listing. Not only will most of the high quality real estate resources be allocated to Shimao real estate, but also to eliminate the doubts of the HKEx on its competition with the other two listed companies, the Shimao International and world trade shares will be located in the overseas development projects, the residential projects with a scale of less than 200 thousand square meters and commercial real estate projects with a scale of less than 100 thousand square meters.

However, at the same time, Xu Rongmao, who favours the balance to tilt to the Shimao estate, positioning the embarrassing WTO shares and losing the support of Shimao International real estate projects, can not get rid of the fate of being marginalized.
It is understood that at present, the world trade shares of the five major projects, Shanghai Shimao lakeside garden has been completed, Fuzhou Shimao the Bund garden is the only remaining sales did not carry forward. The Shanghai metropolis project is still in negotiations with the government. The plan has not been passed, and the land has not been fully obtained. At present, there are only two projects in Nanjing and Kunshan, and the construction area of the rights and interests is less than 800 thousand square meters.

"Due to the strategic positioning of being marginalized in Shimao Group, Shimao shares are making progress in the development and acquisition of new development projects. The valuation of stock price is not high, and it is also marginalized by capital market. " Joint securities analyst Yu Jinhua pointed out.

Similar to WTO shares, Shimao International, which is located in the international real estate business, is not ideal. According to the annual report, Shimao International lost 194 million yuan in 2006, with a net asset value of 629 million yuan. To be exact, the disgrace of Shimao International is not just a result of the run of Shimao real estate. It is understood that the commercial exhibition center and hotel of Shimao International developed in Heilongjiang province were completed in August last year, but due to Russia's implementation of the latest ban on business, the related leasing business has been greatly affected, and the Pearl project in St Petersburg has been shelved.

In addition to the successful listing of Shimao real estate, Xu Rongmao also showed the industry a clear roadmap of integrating its real estate business: the flagship estate of Shimao has been expanding continuously, and the real estate resources of the group have been brought to Shimao real estate. And the final integration operation of the three listed real estate companies has become the only suspense.

A+H riddle unveiled

For Shimao International, which is already in the "chicken ribs" state, Xu Rongmao chose to privatize it and transform the assets it possessed into its private investment. And for the lack of financing capacity of the world trade shares, Xu Rongmao chose Shimao real estate capital injection mode, so that forced to enter the corner of Shimao shares reborn, and create a popular A+H mode.

"The operation of three listed companies at the same time has resulted in the decentralization of capital and human resources. Compared with that, the A+H mode has more operational space and financing efficiency." A housing company executives analyzed.

In fact, in Shimao real estate listing and growing, Shimao shares in Xu Rongmao's real estate chess game once became a bit insignificant.

However, for the red chip listed Shimao real estate, the direct return of A shares is somewhat inadequate. Shimao real estate registration in the Cayman Islands, at present, the return of red chips for housing prices is still not expected.

Precisely on this point, the A shares of Shimao shares have fulfilled the possibility of the return of the Shimao property curve.

This point has been recognized by Bai Hongwei, a real estate analyst in CICC. Shimao real estate has to return to A shares, and it is possible to put the existing Shimao shares as a platform to inject assets into it.

Sure enough, in June 7th, Shimao shares launched a series of operations with Shimao real estate such as capital increase, injection of assets and issuance of shares.

It is reported that some of the injected projects are being transferred from Shimao property to Shimao BVI (business) wholly affiliated item company, and the above transactions are major related transactions, which require approval from relevant departments.

"After the capital increase is completed, Shimao enterprise, the largest shareholder of Shimao shares, will become a controlling subsidiary of Shimao real estate. The essence of this non-public offering is Shimao real estate's indirect landing on the A share market." Fish Jinhua pointed out.

With the injection of about 4000000 square meters of commercial real estate projects, Shimao shares will become a domestic first tier commercial real estate development enterprises. This means that Shimao shares will get rid of the more awkward position in the group, and the space for sustainable development will be greatly broadened. At the same time, Shimao real estate will bring A shares into the bag, and do not lose control of these commercial real estate. It will also be beneficial to the development of Shimao real estate.

The business scope of Shimao real estate and Shimao shares is redefined. Shimao real estate will continue to engage in residential and hotel business, and Shimao shares will be positioned in the development of commercial real estate, including shopping centers, commercial streets and office buildings.

Analysts pointed out that Shimao real estate in 2006 before and after the listing in Hongkong, has gained nearly 10 million square meters of land reserves, with the development of these projects, the demand for funds is very large. At present, the valuation of A shares is higher than that of H-shares. At this time, the commercial real estate split of Shimao real estate is selected to be injected into WTO shares, and then the financing can be sold at a good price.