Shares in property management company Poly Property Development Co. Ltd.jumped more than 29% on their first day of trading in Hong Kong on Thursday. Poly Property, which split in 1994 from China’s fifth-largest property developer Poly Developments and Holdings Group Co. Ltd., is a state-owned company that provides property maintenance services in 148 cities in mainland China, as well as consulting on development projects.

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Shares in Poly Property jumped 13.96% to 14.67% in gray market trading ahead of the company’s IPO on the Hong Kong Stock Exchange. It issued 133 million shares or 25% of its total equity at a price of HK$35.1 ($4.5) per share, reducing its parent company’s stake to 75%. That netted Poly Property HK$4.58 billion and valued it at HK$24 billion. Shares in the company rose to HK$41.85 at opening.

According to its IPO prospectus, 57% of the takings will be used for mergers and acquisitions to expand the company’s property management business, with part of the rest being spent on value-added business including “systems for digitization and smart management”.

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Five cornerstone investors — GIC Private Limited, Gaoling Fund LP, YHG Investment LP, CCCC International Holding Ltd., and China Structural Reform Fund Co. Ltd. — took a combined stake of 7.5% of the company after the share sale. That stake is subject to a six-month lockup period, a way of controlling volatility.

In its early days of expansion, Poly Property mainly provided services for its controlling shareholder Poly Developments, according to its prospectus. More than 90% of its management business came from Poly Development at the end of 2016, but this had dropped to just over 40% in the first half of 2019.

Poly Property has a contracted management area of 455 million square meters (4.89 billion square feet), behind HK-listed Colour Life Service Group Co. Ltd., Vanke Service and Country Garden Services Holdings Co. Ltd.

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Last year, Poly Property’s revenue reached 4.2 billion yuan ($599 million) with 68.8% contributed by its property management business. Of that business, services for residential housing contributed 2.3 billion yuan. The company had total assets of some 3 billion yuan in the first half of 2019, and total liabilities of 2.1 billion yuan, giving it a debt ratio of 71.09%.


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