Greentown China Holdings Ltd.’s shares surged to the highest in 15 months after state-owned China Communications Construction Group became the developer’s largest shareholder.
Greentown jumped as much as 9 percent and was 6.4 percent higher at HK$10.94 as of 10:32 a.m. local time in Hong Kong on Tuesday, the highest since Feb. 21 last year.
China Communications Construction Group bought a 4.6 percent stake in the developer, boosting its holding to 28.9 percent, Greentown said in an exchange filing late Monday.
The land reserves and sufficient funding of China Communications Construction Group, the parent of the nation’s biggest building firm, may help Greentown as the property market is showing signs of recovering after the government reversed a four-year tightening campaign. The Hangzhou-based developer last year ended plans to sell a stake to Sunac China Holdings Ltd. and earlier this month reached an agreement to resolve a dispute with the Tianjin-based company.
“China Communications Construction Group’s ample land reserves could be an alternative landbank source for Greentown,” Eric Zhang, a Beijing-based analyst at China International Capital Corp., wrote in a report on Tuesday. “Its capital strength could also be leveraged to lengthen Greentown’s debt maturity and lower funding costs.”
China Communications Construction Group, based in Beijing, bought 24.3 percent of Greentown in December. Hong Kong’s Wharf Holdings Ltd. is now Greentown’s second-largest shareholder and Greentown founder and co-chairman Song Weiping is the third largest.
The state-owned company will support Greentown in obtaining land resources and broadening onshore and offshore financing channels, Greentown said in the statement.
— With assistance by Emma Dong