(Yicai Global) Sept. 10 -- Chinese hotel giant Huazhu Group submitted its secondary listing prospectus to the Hong Kong stock exchange today, aiming to raise up to HKD7.3 billion (USD946.4 million), The Paper reported.

Shanghai-based Huazhu, which runs the Grand Mercure and Hanting hotels, will be traded under the stock ticker [HKG:1179]. It is planning a global offering of 20.4 million shares and a Hong Kong public offering of two million shares. The offer price and listing date have yet to be determined.

Based on the firm’s Nasdaq-listed share price of USD44.55 a piece at the close of markets yesterday, its Hong Kong stock could reach as much as HKD368 (USD47.50).

Forty percent of the funds raised will be used for capital expenditure to enhance the maintenance and upgrading of its hotel network, according to the prospectus. Another 30 percent will be used to pay off part of its USD500 million debt, while 20 percent will be used to improve the company's e-platforms, such as the room booking app Huazhuhui, and the remaining 10 percent will be used for general purposes.

Huazhu, which has the second largest number of hotel rooms under management in China, plans to open another 50 hotels, ranging from budget to premium brands, after listing, the prospectus said. It will open 40 of these in the first year after listing and the other 10 ones in the following year.

The hotel management firm, however, has yet to disclose its first-half earnings. In the first quarter, the company posted a net loss of CNY2.2 billion (USD322 million), a steep fall from the net profit of CNY990 million it earned the same period last year.

The firm closed 43 hotels in the first half due to the adverse impact of the novel coronavirus pandemic on the hospitality sector, the prospectus showed. Legacy Huazhu's average occupancy rate recovered to 69 percent in the second quarter, far above the industry average of 40 percent.

Huazhu ran 6,187 hotels as of June this year, according to US market research firm Frost & Sullivan’s data. It is developing a further 2,375 hotels, including 54 that will be rented and 2,321 which will be franchises.

The firm posted net profit of CNY1.2 billion (USD179.5 million) in 2017, CNY727 million (USD106.3 million) in 2018 and CNY1.8 billion in 2019, per the prospectus.

Editor: Kim Taylor