Property developers turn to HK for IPO (2)

The CSRC, the country's top securities regulator, said on Friday that it is considering reducing or removing some of these requirements.

Various property developers, including the Shanghai-based CIFI Group Ltd and Jiangsu Xincheng Real Estate Co Ltd, are planning to hold IPOs in Hong Kong.

On Sunday, CIFI Group announced that its price per share on the Hong Kong exchange will be between HK$1.33 and HK$1.65 ($0.17 and $0.21), and it will raise between $220 million and $270 million in its initial public offering.

The average price-to-earnings ratio for CIFI Group, based on the company's performance in 2012, will be between 3.5 and 4.3. Among mainland property A shares that are listed on the Shanghai bourse, the average price-to-earnings ratio is 6.

Analysts said the low issuance prices that are commonly seen in Hong Kong have proved attractive to investors. Since the second half of 2008, the average price-to-earnings ratio of domestic property developers that have been listed in Hong Kong has been 5.8. The limits placed on home purchases in the mainland have also made it more risky to invest in such shares.

The low issuance prices will also give property developers more opportunities to expand, said an investment bank source quoted by the Securities Daily.

Mainland property developers are seeking to go public in Hong Kong as the property market and macroeconomic policies become more stable, said Hui Jianqiang, research director of Beijing Zhongfangyanxie Technology Service Ltd.

In the third quarter, large Chinese developers posted stronger earnings.