Sunday, 11 November 2007

China New Town Development Company Limited


(IPO booth at Raffles Place)

China New Town Development Company ("CNT") is a leading new town developer in PRC. They currently have 3 projects in Shanghai, Wuxi and Shenyang.

Public : 12m shares at $0.83
Placement: 388m shares at $0.83
Manager: Citigroup Global Markets Singapore
Underwriters: Deutsche Bank, DBS Bank

The proceeds will be used to develop the new towns. The 12m float is quite big for the public tranche, as such it will be 'relatively easier' to get this IPO from the ATM than usual. I cannot recall any similar companies listed on the SGX except that Yanlord (a large property developer in China) may be used as a peer comparison. If Yanlord's share price post listing is any indication for China New Town, then it will only be good news to CNT's shareholders.

On one hand, i didnt have much time to evaluate this company as i was travelling last week, on the other hand, i really dont know how to value this company with such unique operations either. I guess the comforting fact to IPO punters is that when i asked for more placement shares (than what was allocated to me), my request was rejected due to the overwhelming demand.

It is really a tough call right now to say if this IPO is worth a "stag". While i am bullish on the long term view of this Company in China (as a New Town developer in a big populated country), there are other concerns as well such as the big share float, whether they will receive new mandates for townships, short term corrective measures taken by the Chinese Government to cool the hot property sector etc.

Conclusion: If we can use Yanlord's post IPO share price as any indication, then there could be longer term upside to CNT. Subscribers to this company's IPO should hold a longer term view and IPO punters should perhaps give it a miss. My gut feel is that it will open above 83 cents though.

4 comments:

hanneng said...

recently, I went to Wuxi & Shanghai for holiday, and have chat with relative & friend over there, the housing demand in big & medium size city is very high.

2Y Capital said...

Dear Hanneng,

Thanks for your comment. Looking at the current weak market sentiments, it will be impressive if they can close above the IPO price on the first day.

BEST1 said...

what happened now.... down to S$0.85.......

Dennis The Menace said...

I believe that the supply of raw materials worldwide is going to get much worse with china and india expanding quickly not to say lots of other countries all over the world the shortage will reach crisis proportions very soon.

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