SHANGHAI Jan 7 Two Chinese companies plan to
raise a combined 1.02 billion yuan ($167.70 million) in their
initial public offerings (IPOs) this week, leading off the
resumption of new listings in mainland stock markets after a
hiatus of more than a year.
The two companies are the first to publish fundraising
targets from a list of 29 companies that have posted IPO
announcements on the Shenzhen and Shanghai exchange websites,
which in turn are part of a pool of more than 750 companies
queued to list.
Ernst & Young estimated that new listings could raise as
much as 200 billion yuan in 2014.
However, Chinese stocks have slid steadily since China's
securities regulator signalled in December it would permit the
resumption of IPOs after freezing new listings in November 2012,
and many analysts fear the flood of new issues will put further
downward pressure on major mainland stock indexes unless
confidence in stocks in general is restored.
The securities regulator said in November it expects around
50 companies to list this month.
According to statements posted on the Shenzhen stock
exchange website late on Monday, Guangdong Xinbao Electrical
Appliances Holdings Co Ltd plans to issue 76 million shares
priced at 10.5 yuan apiece, which would result in a total of
approximately 798 million yuan raised. Xinbao shares will trade
under the ticker number.
Zhejiang Wolwo Bio-Pharmaceutical Co Ltd, to be traded under
the ticker, hopes to raise 217.21 million yuan by
issuing 11 million new shares priced at 20.5 yuan per share.
Both companies will take subscriptions from retail and
institutional investors on Wednesday and announce the results on
The firms are pricing their shares at relatively high
valuations compared to larger listed Chinese companies, at
projected price-to-earnings ratios of 30.08 times for Guangdong
Xinbao and 39.31 times for Zhejiang Wolwo, but this is not
unusual for smaller-cap Chinese tickers, which have widely
outperformed their larger peers in 2013.
For example, larger appliance maker Gree Electric Appliances
is currently trading at a P/E ratio of only 7.7,
according to data from Thomson Reuters Starmine.
($1 = 6.0526 Chinese yuan)
(Reporting by Pete Sweeney, Samuel Shen and Clement Tan;
Editing by Kazunori Takada and Matt Driskill)