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Shanghai firm promotes US$671m IPO
Industrial equipment maker Shanghai Electric Group valued its Hong Kong IPO at up to US$671 million as it braves a lukewarm market that has prompted other listing candidates to put their deals on hold, sources close to the deal said yesterday. German conglomerate Siemens, which has a power generation equipment joint venture with Shanghai Electric, will buy 148.65 million shares, or 1.25 per cent of the firm, for up to US$33.54 million through the IPO, a deal document said. Shanghai Electric is offering 2.973 billion shares, or 25 per cent of its enlarged equity capital, at HK$1.50-1.76 per share, the sources said. That translates to 12-14.5 times its projected 2005 earnings of 1.574 billion yuan (US$190 million). Analysts said the valuation was reasonable when compared with mainland rivals Dongfang Electric and Harbin Power Equipment, which trade at 10 and 29 times their expected 2005 profits, respectively. State-run Shanghai Electric, which kicked off a formal promotional tour in Hong Kong yesterday, will price the deal on April 22. Its trading debut is expected on April 28. Underwriter Credit Suisse First Boston expects the company's earnings to jump by 45 per cent in 2005, thanks to extensive construction of power plants in China to meet soaring electricity demand. "The valuation is okay," said Louis Kwan, director of First Shanghai Asset Management. "Compared with its mainland rivals, Shanghai Electric has bigger scale and stronger finances." But Kwan echoed the concerns of several fund managers attending a briefing yesterday that a boom in China power plant construction is peaking, which could curb growth in 2006 and 2007. Power equipment accounts for nearly 47 per cent of Shanghai Electric's revenue. |
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