Shares of Zhong An Real Estate Holdings traded flat in debut yesterday, making it the worst first-day performer of recently-listed mainland property developers because of sluggish market sentiment and its aggressive pricing strategy.

The Hangzhou-based property developer's shares closed at HK$6.71, inching up a meagre 0.6 percent over its IPO price of HK$6.67. The shares dipped to an intra-day low of HK$5.6 or 16 percent under its IPO price.

The sluggish first-day trading was the victim of a listless market and the firm's aggressive pricing should also be blamed, analysts said.

The stock market turmoil in Hong Kong continued amid worries that the central government might hike interest rates to rein in the mainland's galloping inflation. Rumors that more austerity measures are in the offing also served as a cooling factor.

"Other than the uncertainty surrounding the Hong Kong stock market, the high pricing of Zhong An is a major factor that it didn't perform as well as other property plays," said KGI Asia head of research Ben Kwong Man-bun.

Recently-listed Chinese property stocks had risen sharply. Sino-Ocean Land and Aoyuan surged 43 percent and 39 percent respectively on debut. Beijing commercial property developer, SOHO China, also saw its shares jump 15 percent when it began trading on the local bourse last month.

Speaking about Zhong An's flat trading debut, Tung Tai Securities associate director Kenny Tang said: "The thing about Zhong An is that its land bank is relatively small with only about 300 million square meters, which meant that they can take up less projects."

Tang said the residential developer is already trading at approximately 30 times over its 2007 profit forecast, which is very expensive given its less-than-stellar fundamentals.

Kwong said the relatively small size and singular focus on Hangzhou residential development also made the quality of its profits risky.

"If the shares are cheap, investors may find a reason to take the higher risk," said Kwong. "But it is not cheap and there are so many other choices available to investors now. It is just simply unattractive," Kwong added.

Zhong An raised HK$3.62 billion in its IPO after raising its top indicative offering price range by 6.7 percent to HK$6.75 from an initial HK$6.25 to benefit from the hype surrounding the recent IPO fever. The real estate developer sold a total of 543 million shares or 27.15 percent of its enlarged share capital.