China

China Wuyi Co. Plans to Raise RMB 1.4 Bln via Non-Public Offering

Summary:

  • China Wuyi Co. (000797.SZ) plans to issue 88.5 million shares at RMB 16.26 per share to raise RMB 1.4 billion through a nonpublic offering, according to Sohu.
  • Shares of China Wuyi Co. will resume trading on November 21.

Why It Matters:

  • China Wuyi plans to use the funds in its overseas real estate business. China Wuyi will build a production plant in Kenya. The company suggests the project is in line with the Chinese government’s “One belt, One road” strategy and it expects the project to boost its profits.
  • In terms of the “One belt, One road” strategy, some analysts suggest it is too difficult to implement. Unless China Wuyi’s project is government backed, the attendant risks should be a major consideration for investors.
  • China Wuyi’s two major businesses are real estate and overseas construction. In the third quarter, the company posted a 83% decline in net profit and attributed this to the fact that the firm did not consolidate pre-sales into revenue.