Xinyuan Property Management Arm Completes HK$127.2 Million Follow on Offering

The Hong Kong -listed company has sold 50 million shares at HK$2.60 each.
Anthony RussoJul 15,2020,20:55

Xinyuan Real Estate Co., Ltd. (NYSE: XIN) announced Wednesday that its Hong Kong-listed property management arm has completed its roughly HK$127.2 million follow on offering.

The Beijing-based real estate developer said in a statement today that Xinyuan Property Management (XPM) Services (Cayman) Ltd. (HKEX: 1895) has sold 50 million shares of common stock at HK$2.60 each. XPM plans to use the proceeds for its business operations, strategic investments, and general corporate purposes. After the offering, XIN will continue to “own 60% and 54.55%” of XPM respectively.

Guotai Junan Securities and Valuable Capital Ltd. are the underwriters on the deal.

The offering today follows XPM’s debut it made on the Hong Kong Stock Exchange in October 2019, raising around HK$220.3 million ($28.1 million). Since mid-April, XPM has been a strong gainer in the stock market. Shares of XPM have soared 64% since Apr. 15. However, it did fall 6% at the close of trading Wednesday to HK $3.12 per share; it's important to note the announcement was made after the Hong Kong markets closed.

“Xinyuan Property Management has performed quite well since its initial public offering in October of 2019. This successful offering of shares will further enhance its strong brand recognition and leadership position in property management services,” Yong Zhang, the chairman, and chief executive officer of XIN, said in a statement today.

He added, “We believe that Xinyuan Property Management's successful performance will strengthen our core real estate development capability and bring meaningful benefits to our business, our customers, and our shareholders."

Meanwhile, it’s been a different story for its New York-listed parent,  as it deals with American investors amid high Sino-U.S. trade tensions. Shares of the XIN have plummeted 41% year-to-date.  

Operating for more than 20 years, XIN develops real estate projects in more than 10 cities in China, including Beijing and Shanghai. According to its statement, XIN was one of the first Chinese real estate developers to enter the U.S. market and is particularly active in New York City. As of March, XIN had more than 6,000 active projects, while 1,862.2 remained unsold.

In the three months through June, XIN’s revenues tumbled 73% to $125.8 million. Net loss was $39.1 million, or 73 cents per share, in contrast to a net income of $18.2 million, or 33 per share in the same period in 2019. 

The stock in XIN was trading nearly 3% higher from Tuesday’s close, as of midday Wednesday.