China Railway Construction plans to raise as much as RMB22.25 billion ($3.11 billion) in its Shanghai initial public offering after setting its price range.

It proposed a range of RMB8 to RMB9.08 for the offer price of its Shanghai sale, which will be followed by a Hong Kong float, the nation’s second-largest infrastructure contractor said yesterday.

The range will represent a price/earnings ratio of 26.92 to 30.56 based on its 2007 net profit.

Officially the company said, ‘As major IPOs on the Chinese mainland have all fixed their offer prices at the top of the indicated ranges since 2007, it should be no problem for China Railway Construction to follow suit.

Subscriptions for China Railways Construction’s IPO have opened and trading will start in the first 10 days of March.

The company has said it will use proceeds of the Shanghai sale to buy construction equipment, expand machinery production, develop the property sector, finance construction of a passenger rail line and repay bank loans, with a combined cost of RMB15.87 billion.

China Railway Construction, which has just won tenders to build rail projects in Libya, is China’s top rail builder by overseas contracts.
Source: China View

Taiwan and the mainland have taken a big step towards dismantling one of the biggest remaining barriers to cross-strait economic ties by reaching an initial agreement to allow Taiwanese banks to buy stakes in mainland banks through subsidiaries in Hong Kong.

Taiwanese companies are among the biggest foreign investors on the Chinese mainland, with more than $150 billion in assets but Taiwan law bans banks from investing in the mainland.

Banking regulators in Taipei and Beijing have now agreed that Fubon Bank, one of Taiwan’s largest lenders, can take a 20% stake in Xiamen Commercial Bank through Fubon’s Hong Kong subsidiary.

The Hong Kong Monetary Authority (HKMA), the territory’s central bank, will act as an intermediary for supervisory information. People close to the agreement said the Fubon investment would act as a ‘case study’ for future possible tie-ups.

It is not clear when the mainland will signal its final agreement although there is a suggestion it could come in late March.

Fubon bought Hong Kong-based International Bank of Asia in 2003, but has failed to get approval from Beijing for its subsidiary to acquire a stake in a mainland bank.

The illustration has  nothing to do with the story, although it is a role playing character called ‘Fubon’. Better looking than a bank any day.
Source: Financial Times

Chinese oil rig manufacturer Honghua Group plans to raise up to $480 million in a Hong Kong initial public offering. Honghua, which had pushed back its IPO in January due to poor market conditions,is offering 833.36 million shares, or 25% percent of its enlarged share capital.
If it happens as planned Honghua will be the first company to tap the Hong Kong market with an IPO since the Lunar New Year.

At the same time, China Railway Construction (one of its products is the illustration) is marketing its Hong Kong and Shanghai IPO, which is expected to raise a combined $4 billion in what would be the world’s biggest IPO this year.

Although the market is still down 14.6% this year, a successful Honghua or China Railway Construction listing would encourage other firms that had postponed IPOs to relaunch their deals.

A warning note was struck by Adam Tam, fund manager at Pacific Sun Investment Management, who said, ‘Market sentiment has not fully recovered yet. Fund-raising activities are still difficult, as investors are very selective.’

Other forthcoming IPOs include food and beverage producer Want Want Holdings, which is premarketing for a $1 billion IPO.

Chinese department store Maoye International is expected to relaunch its IPO after Goldman Sachs added UBS and HSBC as sponsors for a deal that was set to raise up to $905 million before it was pulled in January.
Source: Reuters

Ronald Arculli, shown in our illustration, the chairman of Hong Kong Exchanges and Clearing, the company that owns the local exchange, has made no secret of the fact that closer integration with the booming exchanges of Shanghai and Shenzhen — up 120% and 175% respectively this year — and tapping the huge savings of Chinese investors is vital to future prosperity for one of the world’s great financial centers.

In an interim results report for the first half of the year Hong Kong Exchanges and Clearing noted that of 32 listing applications, 23 were from mainland companies.

Mainland listings and relaxed rules on China’s outbound investment have been big contributors to a profit surge for the company: first-half profit more than doubled to about $30 million, compared with the same period last year. Average daily turnover on the exchange was 82% higher than last year.

That is not to say that the idea is welcomed with open arms in China. A report by CLSA Asia Pacific Markets released last month said:

‘There is a sense among some people that Hong Kong can be cast aside as soon as the larger national system gets up to speed, which is why there are sentiments that Shanghai will take over Hong Kong’s role as the premier financial center one of these days.’

On Sept. 7, the Hong Kong government announced that it had lifted its holdings in the Hong Kong exchange to 5.9%. The reason for the acquisition — above a threshold that normally requires regulatory approval — was to support the exchange’s ’strategic development,’ the government said in a statement.

This is a long and interesting article and well worth reading in full. Click on International Herald Tribune below.
Source: International Herald Tribune

The strong rumor is that Alibaba.com has won approval from the Hong Kong Stock Exchange for a long-anticipated IPO expected to be worth roughly $1 billion.

Alibaba Group, which is partly owned by Yahoo, plans to list its business-to-business operation, Alibaba.com, but does not plan to make its other units part of the initial public offering, one source said.

Jack Ma, seen here, founded Alibaba in his Hangzhou apartment in 1999 with 18 employees as an online business-to-business marketplace.

Now, Alibaba.com provides a platform for small and medium-sized buyers and suppliers from China and overseas for international and domestic online trading and employs 4,400 full-time staff.

Its marketplaces form a community of more than 24 million members globally.

Alibaba absorbed Yahoo’s China business in 2005, and Yahoo bought a 40% stake in Alibaba for $1 billion as part of that deal.
Source: Reuters

Chinese companies will launch a record number of initial public offerings in 2007. Through September, mainland Chinese firms raised $34.6 billion through IPOs in Shanghai and Shenzhen. Other Chinese firms raised $12.4 billion in Hong Kong.

In the U.S., 16 Chinese companies have launched IPOs this year, raising more than $3 billion. The previous U.S. high was 11 in 2004.

Three more Chinese companies plan U.S. IPOs this year: Fuqi International, Noah Education and Longtop Financial Technologies.

Buoyant stock markets — the Shanghai exchange is up 108% this year — have fueled domestic IPOs. Mainland Chinese companies raised more IPO money than any other country last year and will do so again in 2007.

China’s consumers have shifted savings from banks to stocks. Many Chinese firms have invested in the booming stock market to boost earnings.
Source: Yahoo News

Sino Ocean Real Estate Development, partly owned by China’s largest shipping firm, COSCO International, will make an initial public offering, an IPO, worth up to $1.3billion on the Hong Kong stock exchange.

The Chinese property company will start pre-marketing next week (What does pre-marketing mean? Letting the big players in early for a slice of the pie) and aims to raise somewhere around a billion dollars. In doing it this way — no formal announcement — it is testing the water after weeks of world stock market turmoil.

Hong Kong stocks have galloped 17.6% since China allowed mainland individuals to invest in Hong Kong stocks. This, in turn, encouraged Chinese companies to move forward with plans to list on the Hong Kong exchange. In a sense it gives access two worlds of money — China and Hong Kong.

Y.K. Chan, a strategist at Phillip Capital Management in Hong Kong said, ‘After recent stock market volatility, investors will be more selective about investing in IPOs, as they are not willing to lock up the money for buying IPOs. Instead, they will prefer investing in the secondary market.’
Source: The Star Online

Capital raised by new listings in China will probably be more than $52 billion this year which is twice the figure forecast in January. Which seems to indicate that China could become the world’s leading center for share offerings this year.

The potential sums raised emphasize the huge liquidity in China’s domestic stock market. The other side of the coin is that if a mainland IPO is held in China then Hong Kong, London and New York will miss out.

This forecast for China IPOs was issued by PwC, the professional services firm. Richard Sun, PwC partner, said the firm expected capital raised by A-share listings in Shanghai and Shenzhen to total RMB400 billion ($52.6 billion) in 2007, up from a forecast RMB200 billion in January.

The flood of offerings is being driven by mainland companies’ rush to benefit from valuations on the soaring stock market. The main Shanghai index has trebled in the past 18 months.

An unnamed senior Hong Kong banker said, ‘This latest forecast is scary. Authorities in Hong Kong are going to have to work very hard to maintain the dominance and relevance of its bourse.’

US exchanges are particularly concerned that they are missing out on the flood of Chinese IPOs and have blamed US regulatory burdens for discouraging overseas companies.

In fact, the situation seems to be improving. In the year to June 5, there were 11 listings of China and Hong Kong-listed companies in the US, compared with just two in the same period last year although the sums raised were relatively small.

PwC said that A-share listings in China in the first six months of the year came to RMB169 billion, with an even stronger IPO forecast for the rest of the year.

Mainland China’s stock markets are largely out of bounds to foreign investors, whose holdings represent less than 1% of the market capitalization of all the stocks.
Source: Financial Times

China Molybdenum, the mainland’s largest molybdenum miner, plans to raise up to $883 million (almost RMB7 billion) in an initial public offering. Luoyang-based China Moly will sell 1.08 billion new shares, or 25% of its enlarged share capital.

Based on 2007 earnings the estimated price range values the company at between 11 and 14 times earnings.

China Moly operates one of the largest pure molybdenum mines in the world. It is estimated to have 498,000 tonnes of molybdenum reserves and 506,000 tonnes of tungsten reserves. Both molybdenum and tungsten are used as alloys to harden steel and are in strong demand by China’s rapidly growing stainless steel industry in particular. The illustration is of a slab of the stuff which is called by most miners MollyBeDamned.

This IPO makes China Moly the third largest Hong Kong IPO so far this year after China Citic Bank and real estate developer Country Garden.

The money raised from the IPO will be used partly to set up its own processing facilities to recover tungsten from the raw material left over after extracting the molybdenum.

Prior to the listing, the company is 52% owned by the government of Luanchuan County and 48% by two individuals through an investment company called Cathay Fortune Corp.
Source: Finance Asia