All 'A' eyes are on Wanda realty arm before re-listing

The company logo of Dalian Wanda Commercial Properties Co Ltd is displayed at a news conference on the company's annual results in Hong Kong, China, March 24, 2016. [Photo/Agencies]

Expected listing of Dalian Wanda Commercial Properties Co on the Shanghai Stock Exchange's A-share market, after it delists from the Hong Kong bourse, will likely see mainland investors chasing its shares, experts said.

Earlier this month, Chinese billionaire Wang Jianlin, the largest shareholder in Dalian Wanda Commercial Properties, won shareholders' approval to buy out the Wanda group's real estate arm for HK$34.5 billion ($4.4 billion), which would make it the biggest-ever delisting in Hong Kong.

"Mainland investors, including existing A-share companies that are part-funding the Hong Kong delisting and potential shell firms that the Wanda group company may need if it decides to have a backdoor listing, will eye shares in Dalian Wanda Commercial Properties," said Ma Wenya, general manager of Sunday Fund Co Ltd, which manages assets worth 300 million yuan.

Dalian Wanda Commercial Properties said in its filings with the Hong Kong exchange that mainland's A-share companies Royal Group Co Ltd, Heilongjiang Interchina Watertreatment Co Ltd, Macrolink Culturaltainment Development Co Ltd and Ningbo Shanshan Co Ltd are part-funding its delisting.

Shares in Royal Group Co Ltd rose to 21 yuan on Wednesday, up 47 percent from Aug 15, when Dalian Wanda Commercial Properties released shareholders' vote result on the delisting deal.

In the same period, Heilongjiang Interchina Watertreatment Co Ltd surged 40 percent to 6.46 yuan.

Wang Jianlin told Reuters that Dalian Wanda Commercial Properties would list on the Shanghai Stock Exchange through either an initial public offering or a backdoor listing.

Approval for an IPO could take two or three years, while a backdoor listing would require more than a year.

By Aug 18, 850 companies were awaiting approval of their IPO applications. Only 107 of them had completed all examinations and received approvals, according to the China Securities Regulatory Commission.

Dalian Wanda Commercial Properties is one of the other 743 companies that are yet to get through all the examination and approval processes.

Liu Jipeng, dean of the Capital Finance Institute, which is under the aegis of the China University of Political Science and Law, said the delisting of Dalian Wanda Commercial Properties is reasonable because its valuation is low in the Hong Kong market.

Fresh listing on the A-share market can unlock the stock's value and benefit investors, he said.

Typically, mainland-listed firms command higher valuations than those traded in Hong Kong, helped by a large pool of retail investors.