Bank of Beijing gets IPO go-ahead
Bank of Beijing yesterday received regulatory approval to float 1.2 billion shares on the Shanghai Stock Exchange, an offering expected to attract considerable investor interest.
The third mainland city commercial bank to go public is likely to raise as much as 12 billion yuan by selling a 19.3 per cent stake to investors in the initial public offering, analysts said.
Bank of Beijing, 19.9 per cent owned by ING, did not announce a pricing range for the offer but analysts expect the shares to sell at up to 10 yuan each, 30 times earning per share in 2006.
Other mainland-listed lenders are trading at an average of about 40 times earnings, suggesting that Bank of Beijing shares could climb higher after listing.
Usually, initial public offer shares are priced artificially low to allow investors to make a quick gain during the trading debut.
'The buoyant market is a boon for the bank,' said Huatai Securities analyst Liu Xiaochang. 'The share offer will help raise its profile and the Beijing Olympics will also boost its performance.'
The market performance of the first two listed city commercial banks will also support their counterparts' offers, analysts said.
On July 19, Bank of Ningbo shares surged 140.5 per cent to 22.13 yuan on their first trading day, while Bank of Nanjing jumped 72.2 per cent to 18.94 yuan.
Bank of Nanjing shares traded at 70 times earnings yesterday while Bank of Ningbo's price-to-earnings ratio hit 113.
'Beijing Bank's PE ratio isn't likely to reach as high as the first two city banks,' said Changjiang Securities banking analyst He Sheng. 'Still, the Beijing lender will lure lots of investors based on its fundamentals.'
Bank of Beijing had total assets of 272.7 billion yuan at the end of 2006 and a capital adequacy ratio of 12.87 per cent.
It posted a net profit of 21.4 billion yuan last year, up 27 per cent.
ING's holding in the Beijing lender will be diluted to 16 per cent after the offer, according to a preliminary share-sale document.