Shares of developer Vanke surge as trading resumes

An advertisement for China Vanke Co Ltd in the Shenzhen Metro. Shenzhen Metro Group has become the largest shareholder in the property developer. [Photo/Xinhua]

Acquisition of key stake by Shenzhen Metro means control battle nears end

Shares of China Vanke Co Ltd, China's largest property developer, surged on Monday when share trading resumed after a high-profile battle for control of the company approached its end.

Shenzhen-listed shares in Vanke were up as much as 9.3 percent on Monday morning as it resumed trading, after being suspended last Wednesday morning as Shenzhen Metro announced plans for a major share acquisition. Vanke shares closed on Monday at 21.7 yuan ($3.19), up 3.98 percent.

Hong Kong-listed shares in Vanke also opened higher, up 3 percent in Monday morning trade, closing at HK$ 21.4 ($2.75), a gain of 0.94 percent.

Last week, Shenzhen Metro, a company controlled by the local government, doubled its holdings in China Vanke to almost 30 percent－outlaying some 29.2 billion yuan ($4.3 billion)－buying the holding from the country's second biggest developer, Evergrande Co Ltd.

Analysts said Shenzhen Metro's move put an end to the 18-month long battle for control over Vanke, a conclusion which will benefit the development of Vanke as the company can now focus on its business, and implement its strategies more consistently under stable governance.

A research note from Deutsche Bank said that the emergence of Shenzhen Metro as China Vanke's biggest share holder was positive for Vanke's share price growth because it has cleared away uncertainties lingering over the company's control and management.

Shenzhen Real Estate Research Center analyst Li Yujia said the immediate benefit of Shenzhen Metro becoming China Vanke's largest share holder was its real estate projects could take more advantage of the developing of subway infrastructure in cities.

"For Vanke, the unprecedented development of the subway system in Shenzhen and in many other cities－and Shenzhen Metro's expertise in subway development－will help to maximize the value of its properties," Li said.

"For Shenzhen Metro, Vanke's expertise in development, asset management, cost control and financing will help its sustainable operation."

Guosen Securities analyst Ou Ruiming said that Vanke was likely to strengthen its land acquisitions in central locations in Shenzhen after Shenzhen Metro became the developers' key share holder.

Currently Baoneng Group and its units hold a combined 25.4 percent of Vanke's shares, making it the second largest shareholder.