Hotel operator Huazhu Group shines in HK debut, ignores short-seller report (updated)

H World

22/09/2020 07:07

(Adds comment, updates stock price)
    HONG KONG, Sept 22 (Reuters) - Shares of Chinese franchised
hotel operator Huazhu Group Ltd  1179.HK  traded as high as 5.1%
above its Hong Kong listing offer price on Tuesday, bucking the
negative sentiment across Asian equities markets.
    The stock rose as high as to HK$312 after it opened at
HK$305 each in their Hong Kong debut. The shares last traded at
HK$311, still up 4.7% from their offer price of HK$297 each.
    Huazhu Group  HTHT.O  offered 20.4 million shares, raising
HK$6.06 billion ($782 million) in its secondary offering in Hong
Kong to fund expansion of its hotel network, upgrade its
technology platform and pay down debt.
    The stronger performance comes after Yum China  9987.HK 
shares slid 5.3% when the company made its listing debut in Hong
Kong on Sept. 10.
    The weak debut prompted analysts to question whether
investor demand for future secondary listings in Hong Kong would
remain strong.     
    Huazhu said in a statement early on Tuesday that a report by
shortseller Bonitas Research asserting the group overstated its
profits and assets was without merit and contained errors,
unsubstantiated statements and misleading conclusions. (https://bit.ly/2ZTGRWg)(https://bit.ly/2ROdU9K).
 
    Huazhu's New York listed stock dropped 3.6% on Monday.
    Brokerage Daiwa Capital said in a research note on Monday a
secondary listing of Huazhu in Hong Kong would be a catalyst for
a re-rating of the stock as it expected it to be popular among
southbound investors once it is granted Stock Connect
eligibility. 
    Daiwa also said some of the net proceeds to be used to
reduce the firm's gearing should assuage investors' concerns of
an over-stretched balance sheet.
    The Hang Seng China enterprises index  .HSCE  edged down
0.1%, and the benchmark index  .HSI  slid 0.5% on Tuesday.
    
($1 = 7.7500 Hong Kong dollars)

 (Reporting by Scott Murdoch and Donny Kwok; Editing by
Muralikumar Anantharaman and Stephen Coates)
 ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters
Messaging: donny.kwok.reuters.com@reuters.net))