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By Kennix Chim and Alison Leung
HONG KONG, July 4 (Reuters) - Shares of China High Speed Transmission Equipment Group Co. Ltd. (0658.HK), the country's largest wind power transmission gear maker, doubled in their Hong Kong debut to become the city's best-performing debutante this year, after its US$272 million IPO drew heavy demand.
That robust performance easily outshone the poor to lukewarm debuts of property trust RREEF China Commercial Trust (0625.HK) and Chinese property developer KWG Property Holding Ltd. (1813.HK), suggesting investors were becoming more selective amid steep gains in the market this year.
China High Speed more than doubled to a high of HK$14.44 in the late morning from an initial public offering price of HK$7.08, which was the high end of an indicative range of HK$5.38 to HK$7.08.
It closed the day at HK$14.00 for a gain of 98 percent, which easily surpassed the 79 percent first-day performance of Emperor Capital (0717.HK), which listed in April.
The gains also outpaced a 0.55 percent rise in the index of Chinese companies listed in Hong Kong .HSCE, which scaled a record high earlier in the day.
"It's an explosive rise that's out of this world," said Francis Lun, general manager at Fulbright Securities of CHST's gains.
"Wind power generation is an environmental concept and a hot topic, whether the company makes a profit or not doesn't matter."
RREEF China fell 8.2 percent in its market debut late last month and KWG Property lagged forecasts on Tuesday with a 7.7 percent first-day gain, signs that investors are becoming more cautious following steep market gains so far this year.
"The market is a bit high and IPOs are priced more aggressively now," said Alex Tang, research director at Core Pacific-Yamaichi International (HK) Ltd.
The blue chip Hang Seng Index .HSI hit a record of 22,307.60 on Wednesday and has gained 11 percent this year. The index for Chinese companies listed in Hong Kong has risen more than 20 percent in the same period.
But stocks in China's growth sectors are still in hot demand, with investors keen on the renewable energy concept as the country moves to clean up its air and water and curb its reliance on imported resources.
Despite being priced at 47.2 times 2007 prospective earnings, the retail portion of China High Speed's US$272 million IPO was nearly 700 times subscribed.
Analysts said there was no similar companies listed in Hong Kong and the stock should warrant a higher premium given China's long-term alternative energy goals.
The company, which supplies the likes of wind power generation firms, marine vessels and the rail transport industry, expects its 2007 net profit to more than double to 180 million yuan ($23.7 million), up from 85.6 million yuan last year.
Morgan Stanely (MS.N) was the sponsor of the deal.
((Editing by Anne Marie Roantree & Jean Yoon; firstname.lastname@example.org; Reuters Messaging: email@example.com; +852 2843 6313, Fax +852 2845 0636)) Keywords: HIGHSPEED DEBUT/IPO
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