Hong Kong-listed Dalian Wanda Commercial Properties Co announced its intent to get listed on the A-share market, which experts said Sunday is aimed at broadening funding channels for new plazas, despite the current slump in the A-share market.
Experts said that the A-share market is more generous in valuation of listing applicants, although the commercial projects Wanda plans to develop face an uncertain future due to a slowdown in the industry.
The proposed A-share offering will be no more than 300 million shares with 1 yuan ($0.16) per share, according to the company's statement posted on the website of the Hong Kong bourse on Friday.
The issuance of A shares will further broaden Wanda Commercial Properties's funding channels, increase the company's working capital, and gain recognition in the capital market by attracting various kinds of investors, the statement said.
Wanda Commercial Properties, the property arm of Dalian Wanda Group, completed a listing on the Hong Kong stock market on December 23 in 2014, raising $3.7 billion.
The company's share price at Hong Kong stock market closed at HK$56.35 ($7.3) on Friday with 3.01 percent daily drop.
The company is trying to raise more capital to support its future development and the country's A-share market offers higher valuation compared to Hong Kong-market, Li Daxiao, chief economist with Shenzhen-based Yingda Securities Co, told the Global Times on Sunday.
"Like its major rival China Vanke Co, which is listed on the Shenzhen bourse as well as in Hong Kong, Wanda Commercial Properties is seeking for more platforms to raise funds for its projects," Li noted.
Though the country's A-share market is volatile, Wanda Commercial Properties' upcoming IPO within the next year would not be affected by the recent plunge, Li said.
Once the offering proposal is approved by shareholders, the company expects to complete the A-share listing within one year, according to the statement.
The Chinese stock market has experienced a slump over the past weeks. The benchmark Shanghai Composite Index has tumbled by 29 percent in three weeks, the Xinhua News Agency reported over the weekend.
To stabilize the stock market, the IPOs of 28 firms on the Shanghai and Shenzhen stock markets have been postponed, according to Xinhua.
Echoing Li, Wang Yaqian, analyst from Beijing-based market research firm iResearch, noted that Wanda Cinema Line, the Wanda Group unit listed on the Shenzhen bourse, has witnessed a strong performance since January, which might have encouraged Wanda Commercial Properties to get listed on the domestic market.
Wanda Cinema Line share has climbed more than 600 percent since it began trading on the Shenzhen Stock Exchange in January. In comparison, Hong Kong-listed Wanda Commercial Properties had a year-to-date increase of 14 percent by Friday.
The fund raised from the proposed A-share offering will be no more than 12 billion yuan and will be invested into five Wanda Plaza projects in five second- and third-tier cities, the statement said.
"Wanda Commercial Properties has a unique location strategy for its Wanda plazas," said a Shanghai-based real estate industry analyst surnamed Zhang, noting the company often chooses places that lack commercial facilities.
However, the off-line retailing industry has been shadowed by the flourishing e-commerce, and commercial property sector in many cities is suffering from oversupply, so it is hard to predict if Wanda plazas will perform well in the future, Zhang told the Global Times on Sunday.
