UPDATE 2-Jiangsu Phoenix surges 35 pct on Shanghai debut

Wed Nov 30, 2011 3:34am EST

* Shares jump despite broader market's 3.3 pct fall

* Raised more than originally planned in $705 mln IPO

* Overall investor sentiment still seen weak - analysts

* New China Life to set price range for Shanghai IPO on Wed (Updates with closing price, analyst comments)

By Melanie Lee

SHANGHAI, Nov 30 (Reuters) - Shares of China's Jiangsu Phoenix Publishing & Media Corp Ltd surged 35 percent on its Shanghai debut on Wednesday after a $705 million IPO as optimism about the sector outweighed weakness in the broader market.

Jiangsu Phoenix's strong debut, analysts said, did not necessarily point to a recovery in the overall market sentiment and would not rub off on New China Life Insurance's Shanghai initial public offering.

The country's third-largest insurer will set an indicative price range for the Shanghai portion of its Shanghai-Hong Kong dual listing later on Wednesday.

"Current market sentiment is generally not good for IPOs," said Zeng Sufen, analyst at Industrial Securities.

"I don't expect to see keen demand for New China Life shares as the industry may suffer from a volatile market and slowing premium growth next year."

IPOs on the mainland market have been dominated by smaller deals so far this year, although a slew of large ones are expected to be launched within the coming months.

A-share turnover on the Shanghai bourse has steadily declined in the last few weeks, hitting its lowest level of the year last week. Market watchers attribute the poor appetite among investors largely to an uncertain macroeconomic environment globally and in China.

However, such worries seemed to scarcely bother investors who flocked to shares of Jiangsu Phoenix, one of the country's biggest publishers, which raised 4.48 billion yuan through its IPO, much more than it had initially planned.

Its shares closed at 11.87 yuan a piece, up 35 percent compared with the IPO price of 8.8 yuan. It gained as much as 47 percent, although the market benchmark Shanghai Composite fell 3.3 percent, the biggest one-day percentage fall in nearly four months.

"This company should benefit from an emphasis on cultural industries that the government announced recently," said Chen Yi, an analyst at Xiangcai Securities in Shanghai.

"I think it's a good investment in the longer run and would represent good value at about 9 yuan, but right now, I think it's too highly priced and would actually advise clients to sell into strength," Chen said.

RICHER VALUATION

Jiangsu Phoenix had said in its draft prospectus it planned to raise 2.76 billion yuan to fund an expansion of its sales network, book publishing and e-commerce.

At its IPO price, Jiangsu Phoenix would be valued at 50.7 times its 2010 earnings, it said in a filing earlier in the month. Its listed peers currently trade around 34 times historical earnings, according to the statement.

The firm competes with China South Publishing & Media Group .

Last month, Sinohydro Group, which built the Three Gorges Dam, rose 17 percent in its Shanghai debut after raising $2.1 billion in the mainland's largest IPO this year.

Several state-owned media companies, including the website of the People's Daily, are planning to float IPOs to raise funds for new projects, local media reported earlier this year.

China International Capital Corp was the sole underwriter of the Jiangsu Phoenix IPO. (Additional reporting by Samuel Shen, and Clement Tan in Hong Kong; Editing by Kazunori Takada and Muralikumar Anantharaman)

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