China Property Portal SouFun Seeks Backdoor Mainland Listing

Updated on
  • Firm joins Wanda, Evergrande eyeing lofty valuations in China
  • Shell entity Chongqing Wanli surges by 10 percent daily limit

SouFun Holdings Ltd. plans to switch its stock listing from the U.S. to China, joining companies including Dalian Wanda Commercial Properties Co. that are seeking higher valuations on mainland stock exchanges.

SouFun, China’s biggest real estate web portal, is seeking to move its shares to the Shanghai stock exchange via an asset and share swap with storage-battery manufacturer Chongqing Wanli New Energy Co. Wanli will use shares worth 16.2 billion yuan ($2.5 billion) to buy SouFun assets through its units, Wanli said in a revised asset purchase filing on Tuesday. Separately, Wanli plans to raise 3.01 billion yuan through private placements to fund operations. The proposal is pending regulatory approval.

Shares of Wanli surged by the 10 percent daily limit to 36.40 yuan as of 2:39 p.m., after they resumed trading in Shanghai on Wednesday. They had been suspended since August.

SouFun is among a growing number of Chinese firms, notably developers, seeking higher valuations by moving their listing from New York or Hong Kong to mainland exchanges. Billionaire Wang Jianlin’s Wanda Commercial is asking investors to back an effort to take his Hong Kong-traded property company private and relist it in China, according to a document obtained by Bloomberg News. Evergrande Real Estate Group Ltd. agreed to acquire a stake in a Shenzhen-listed entity, an acquisition that could signal Chairman Hui Ka Yan is also considering a similar move.

SouFun’s valuation would be 40 times its expected 800 million-yuan profit in 2016, based on Wanli’s share price before the stock was suspended, China Securities Co. analysts led by Shanghai-based Chen Shen wrote in a note Wednesday. SouFun’s U.S.-listed shares trade at 11.9 times 2015 earnings, data compiled by Bloomberg show.

China-listed stocks trade at an average 139.4 times 2015 earnings, compared with 28.4 times for stocks traded in Hong Kong and 40.2 times for U.S.-listed companies. 

— With assistance by Emma Dong

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