Xinyuan's Property Management Service Soars 42% in Hong Kong on IPO Day

Xinyuan Property Management Service sold 125 million shares in the global offering, raising approximately HK$220.3 million ($28.1 million) after expenses.

Author: Belinda Zhou   

The stock in Xinyuan Real Estate Co. Ltd. (NYSE: XIN) closed up 7 cents on Friday, at $4.14 per American depositary share, after its property management unit debuted with fanfare in Hong Kong. 

Xinyuan, based in Beijing, announced today that its entity, Xinyuan Property Management Service (Cayman) Ltd. (HKEX: 1895) became publicly traded on the Hong Kong Stock Exchange on Friday. It sold its shares at HK$2.08 (approximately 27 cents), leading to a market valuation of HK$1.04 billion, according to the statement.

The stock in Xinyuan Service lifted off at HK$2.80, peaked at HK$4.20 early and ended the day at HK$2.95 per share. 

Overall, Xinyuan Service sold 125 million shares in the global offering, raising approximately HK$220.3 million ($28.1 million) after deducting underwriting fees and related expenses, according to a Thursday filing with the Stock Exchange of Hong Kong. 

"Our decision to list Xinyuan Service as a separate entity on the HKEX is an extension of the strategic realignment of our business, which we anticipate will contribute to strengthen our core real estate development capability," Yong Zhang, the chairman and chief executive officer of Xinyuan, said in a statement today.

Charles Wang, a representative for Xinyuan Real Estate, told CapitalWatch on Friday that the performance of Xinyuan Service on its IPO day was in line with the company's market expectations.

Asked about the political tension between China and Hong Kong, Wang said, "We have confidence in the long-term development of the Hong Kong capital market and we believe those problems are temporary even if they do exist."

Xinyuan Service reported revenue of 108.8 million yuan ($15.35 million) for the first quarter of 2019 and reported annual growth rate of 31.3% from 2016 to 2018 in its prospectus filed with HKEX in September.

Xinyuan Real Estate will remain the largest shareholder in Xinyuan Service, with a stake of 60%. The results of Xinyuan Service will be provided on its parent company's balance sheet when reporting future financial results, the company said in the press release Friday.

"Compared with the market cap of the group, Xinyuan Service only accounts for a small portion," Wang said.