* 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 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
"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
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
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