UPDATE 2-China's Jishi Media nearly doubles on Shanghai debut

Thu Feb 23, 2012 4:11am EST

* Shares up 87 pct in first day of trade

* Stock pushed up by rebounding market sentiment

* Analysts say stock currently too expensive

* Marks turnaround from lacklustre performance of past IPOs

* Regulator taking aim at unreasonable IPO pricing (Recasts with share price surge)

By Melanie Lee and Samuel Shen

SHANGHAI, Feb 23 (Reuters) - Shares in Jishi Media Co Ltd surged 87 percent on their debut on Thursday following the Chinese cable TV company's $311 million IPO, reflecting improved demand for new offerings after the recent stock market rebound.

Jishi Media shares rose to 13.12 yuan ($2.08) in Shanghai at the market close, compared with its initial public offering (IPO) price of 7.00 yuan.

The stellar performance contrasts with weak debuts by many Chinese companies in the past year, partly because a 10 percent rebound in the stock market so far this year has rekindled some investor interest towards IPOs.

"Jishi Media's surge today was mainly triggered by the recent market rally, as well as positive sentiment towards media stocks recently," said a media analyst, who declined to be identified because he was not authorised to speak to media about individual companies.

"The company is already over-priced, so I expect the shares to come down gradually in the coming weeks."

Zhang Zejing, media analyst with Hongyuan Securities, said in a recent research report that Jishi Media's fair value is 7.86-8.84 yuan.

The company, which operates in the northwestern province of Jilin, had initially planned to raise about 2.2 billion yuan to fund two cable network projects, but the fundraising was reduced amid weak investor demand for new shares.

CATCHING REGULATOR'S EYE

A volatile stock market has forced a number of companies to postpone share sales or cut the size of IPOs.

Regulators have also been taking aim at what has been seen as a problem of some IPOs being overpriced, leading to falls in share prices after the stocks start trading.

Guo Shuqing, head of the China Securities Regulatory Commission (CSRC), said the agency will address the issue of overpriced IPOs, the official China Securities Journal reported on Thursday.

Jishi Media posted average annual profit growth of 208 percent during the 2008-2010 period, thanks to a government-led campaign to transform analog TVs into digital. The company has warned that the benefits of the reform could gradually fade.

The company said its earnings doubled in 2010 after surging 373 percent in the previous year.

Citic Securities is the lead underwriter for the deal. ($1 = 6.2960 Chinese yuan) (Editing by Jason Subler, Jacqueline Wong and Muralikumar Anantharaman)

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