23 October 2018
Dalian Wanda Center glows at night. Photo: Bloomberg
Dalian Wanda Center glows at night. Photo: Bloomberg

A lesson from the only Hong Kong June 4 listing

The fourth day of June is certainly not considered to bring good luck to the Chinese, given the tragic events in Beijing that fateful day 25 years ago.

So, it’s no wonder that companies avoid scheduling listings and other market initiatives that day. But there is one company that has gone against this trend — Hengli Commercial Properties Group, the mainland developer that is now known as Wanda Commercial Properties Group (00169.HK).

In fact, a study reveals that Hengli is the only company, out of a total of 1,667 listed firms in Hong Kong, to have chosen this inauspicious day to list its shares in the local bourse’s entire history.

Hengli, then a tiny mainland property firm, made its market debut on June 4, 2002. Before the company was acquired by Dalian Wanda Commercial Properties and renamed last year, Hengli notched a record for staying below its initial public offering price for almost 11 years. At one point, the stock was almost 90 percent below the IPO price.

But the acquisition by Dalian Wanda, initiated in April 2013 and completed in June that year, has turned around its fortunes. The stock surged almost fivefold on the day it became known that it will be a back-door listing vehicle for Wanda Commercial Properties. Since then, the counter has seen over tenfold increase in its valuation. On Tuesday, it closed at HK$2.54, way above its IPO price of HK$1.0.

Following the acquisition, the company’s chairman is Wang Jianlin, who was named China’s wealthiest person last year with a net worth of US$14 billion.

Dalian Wanda Group, which owns commercial properties, hotels, cultural tourism facilities and department store chains, posted a profit of 12.5 billion yuan last year on turnover of 186.6 billion yuan.

The group made global headlines two years ago when it acquired United States-based cinema chain operator AMC Entertainment for US$2.6 billion. Last year it acquired British yacht builder Sunseeker International for US$500 million.

As in the case of other major mainland property firms, Wang has led his company to overseas expansion. He invested some 300 million pounds (US$502 million) in renewal projects in Britain, including a 160 luxury-hotel in London, after meeting British Prime Minister David Cameron.

Last November, Wang was under fire in mainland media for spending some US$28 million (HK$217 million) on Picasso’s 1950 ‘Calude et Paloma’ painting at a New York auction.

Despite the high-profile push, there hasn’t been any asset injection plan for Wanda Commercial. But the shares, now worth HK$9.4 billion, seemed to have priced in a potential value creation from the Wang flagship.

If there is any lesson to be drawn from being a Hengli/Wanda shareholder, it is this: a disaster did happen on June 4, causing long-term suffering, but there is always the chance for a happy ending!

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EJ Insight writer

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