Domestic
China Construction may raise 50b yuan through float
(China Daily/Agencies)
Updated: 2009-07-22 08:05
China State Construction Engineering Corp plans to raise as much as 50.2 billion yuan ($7.35 billion) in the world's biggest initial public offering since March 2008.
China's largest housing contractor will sell as many as 12 billion shares at 3.96 yuan to 4.18 yuan each, according to a filing to the Shanghai Stock Exchange. The sale of a 40-percent stake values China Construction at as much as 125.5 billion yuan.
China Construction's IPO is almost 28 times larger than the second-biggest sale on the Chinese mainland this year, testing a rally that's pushed the benchmark Shanghai Composite 80 percent higher since Dec 31. The company, led by Chairman Sun Wenjie, plans to use proceeds to expand in residential construction, as a surge in bank lending drives a pickup in the housing market.
"The market won't have any problem holding up the China Construction sale," Yu Yang, a strategist at Guotai Junan Securities Co, said before the filing. "There's so much money around after the relatively loose monetary policy."
The IPO values China Construction at as much as 51.3 times 2008 profit, the company said.
China Construction's profit fell 44 percent in 2008 to 4.92 billion yuan because of the slowing property market, rising raw material prices and higher tax payments. The company and its advisors are predicting a recovery this year, as the government's 4-trillion yuan stimulus package begins to revive the world's third-largest economy.
China Construction's offering is the biggest in China since PetroChina Co raised 66.8 billion yuan in October 2007. Worldwide, it is the largest IPO since Visa Inc collected more than $19 billion in March last year.
On concern that new share sales will draw liquidity away from existing equities and this year's rally has outpaced prospects for earnings growth, China stocks fell the most in more than five weeks.
The Shanghai Composite Index yesterday lost 53.71, or 1.6 percent, to 3213.21 points.
The company owns about 34.3 million sq m of land reserves and plans to use them to expand in real estate development, according to its prospectus. China Construction plans to use as much as 8 billion yuan of the IPO proceeds for 24 commercial housing projects requiring a total investment of 15.8 billion yuan.
