Sometimes it is better to sell when one is able, rather than when one wishes. After insurer China Taiping had a $1.7bn rights issue last week, and diversified financial Fosun raked in another $1.2bn on Monday, blue-chip developer China Resources Land yesterday became the latest big Chinese company to tap the market. It aims to raise up to $1.3bn in new equity.
CRL does not appear to need the cash. Its net debt to equity is shy of 50 per cent. Of the big Hong Kong-listed China residential property developers, only China Overseas Land and Investment’s balance sheet is stronger. Many peers are weaker: Barclays forecasts Evergrande’s net debt to equity will hit more than 300 per cent this year as it diversifies away from real estate.
CRL may not appear in immediate need but its stock has rallied hard and demands for cash lie ahead. By the end of 2016 it must find $6bn to pay for its most recent big asset purchase and repay debt, DBS Vickers points out.