* Beijing Utour prices shares at half the valuation of
* Three companies throw out over 90 percent of institutional
* Pricing comes after regulator forces delays of high-priced
(Recasts with two more firms setting low prices)
SHANGHAI, Jan 14 Three small Chinese companies
have decided to sell shares at valuations much lower than those
of peers just days after the securities regulator issued a new
rule to prevent excessive stock pricing.
Beijing Utour International Travel Service Co Ltd, Yangzhou
Yangjie Electronic Technology Co Ltd and Hebei Huijin
Electromechanical Co Ltd plan to list on the Shenzhen Stock
Exchange to raise a combined 1.03 billion yuan ($170 million).
The three may have raised more funds by setting higher share
prices, which could have been possible given the strong demand
for their securities.
The low pricing comes as bankers worry that the regulator's
increased supervision may lead to companies scaling back
fundraising plans as initial public offerings resume after a
The China Securities Regulatory Commission (CSRC) on Sunday
said companies pricing shares at a premium to those of peers
must delay sales by three weeks to publish risk warnings.
The statement came as Jiangsu Aosaikang Pharmaceutical Co
Ltd postponed its IPO after pricing shares above the industry
average. Sources told Reuters its delay was due to regulatory
pressure though the CSRC denied it.
Seven companies have postponed IPOs since the market
reopened two weeks ago.
Beijing Utour, in a document posted on the Shenzhen Stock
Exchange website, said it is selling 14.6 million shares at
23.15 yuan ($3.83) each.
It said the price is equivalent to 22.05 times its 2012 net
profit compared with a peer average price-to-earnings ratio of
The company disregarded over 96 percent of institutional
investor bids in line with new rules specifying that all bids
above the IPO price must be discounted.
The high elimination rate indicates the price is
significantly lower than institutional investors' expectations
and reinforces analyst concern that regulator action will elbow
out market forces in the IPO valuation process.
Neither Beijing Utour, which will trade under the ticker
, nor lead underwriter Huatai United Securities could
be reached for comment.
Fellow Shenzhen exchange aspirants Yangzhou Yangjie and
Hebei Huijin also said they had rejected around 94 percent and
96 percent of bids, respectively, after setting their IPO
Yangzhou Yangjie is selling 20.6 million shares at 19.5 yuan
each, and Hebei Huijin is selling 15.4 million shares at 18.77
Both priced their IPOs below the industry average, according
to their prospectuses.
More than 50 companies have announced plans to list on the
Shanghai and Shenzhen bourses after the CSRC last month said it
would permit the resumption of IPOs which it suspended in
($1 = 6.0434 Chinese yuan)
(Reporting by Shanghai Newsroom; Editing by Kazunori Takada and