China Merchants Property cancels new share sale

10:24, May 14, 2010      

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China Merchants Property Development Co., Ltd (CMPD) announced yesterday to cancel its private placement of public equity refinancing program for the continuously slump of the stock market. It became the first listed realty company revoking the refunding program since the A-share market adjustment.

It is reported that the aborted refinancing program of CMPD was decided on the shareholders meeting in 2009 August. The planned issue price was 28.12 yuan with no more than 200 million shares and less than 5 billion yuan financing scale.

Nonetheless, the continuous decline in real estate stocks this year has already broken the issue price of CMPD though it actively lowered the price to of new share issue to 20.6 yuan. It closed at 16.33 yuan yesterday.

Analysts worried that the cancellation of the refunding program of CMPD may cause large "demonstration effect" which will be followed by more companies if the stock market remained low. Currently, share prices of Poly Real Estate Group, Gemdale Group, Huafa Group are below their planned new share issue prices.

Pan Shiyi, board chairman of SOHO China said 2009 was the most profitable year for China real estate market for lots of companies held more than 10 billion yuan of cash. But he changed his mind when Evergrande Group lowered prices for sales promotion, saying that "the cash flow of real estate companies was seriously affected by the consecutive regulation policies."

By People's Daily Online


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