China Railway Construction gets green light for initial share sale
China Railway Construction Corp, the nation's second-largest railway builder, has won regulators' approval to sell 2.8 billion A shares on February 25, a mammoth offering that will further put pressure on the weakened equity market.
The China Securities Regulatory Commission's green light clears the way for the construction contractor's dual listing on the Shanghai and Hong Kong exchanges that is likely to raise a combined US$5 billion, potentially the world's largest initial public offering so far this year.
'The approval reflects the regulator's attitude towards the slumping market,' said Orient Securities analyst Mao Nan. 'Beijing officials are utterly disregarding the weak sentiment.'
The A-share offering represents 25.93 per cent of China Railway Construction's enlarged capital, the company said yesterday.
It will start negotiating with institutional investors today. The price range will not be set until February 21, when price consultations end.
The shares would make their trading debut on the Shanghai Stock Exchange within the first 10 days of March, the statement said.
The company plans to list its 1.7 billion H shares on March 14. The order book will open on February 25 and close on March 5 in Hong Kong.
China Railway Construction had planned to start a roadshow for its A-share sale before the Lunar New Year, which fell on February 7. It won approval to float shares on January 23. But the regulator put off the offering amid concerns about poor market performance.
The regulator arranges timetables for all initial offerings on the mainland to balance the supply and demand of shares in the market.
The A-share market fell 13.5 per cent this year amid worries that a flood of non-tradeable shares to be unlocked and a potential world recession would take their toll on the economy.
'Without more fund inflows, share prices will decline further,' said Zhang Qi, an analyst at Haitong Securities. 'The [initial offering] outlook for 2008 appears to be dim.'
Analysts said China Railway Construction's offering would still get a warm response at home due to the country's heavy building of railroads.
Beijing has budgeted 1.25 trillion yuan for railway construction for the five years to 2010. The firm said earlier its full-year profit last year should top 3.1 billion yuan.
