Eight start-up firms seek 1.6b yuan in ChiNext IPOs
Daniel Ren in Shanghai
Eight start-up firms will hold initial public offerings next week in an effort to raise a combined 1.6 billion yuan (HK$1.82 billion) by cashing in on the speculative frenzy accompanying the establishment of the mainland's new Nasdaq-style second board.
The firms will conduct price consultations for the rest of this week and sell shares to the public in an online subscription on December 16, according to statements filed with the Shenzhen Stock Exchange yesterday.
It will be the second batch of flotations on the ChiNext board after the first 28 firms made a strong debut on October 30.
Jiangsu Huasheng Tianlong Photoeletric plans to raise the most, seeking 277 million yuan by floating 50 million shares, while the smallest offer is from Guangzhou Improve Medical Instruments, which is selling 18.6 million shares to raise 109 million yuan.
Analysts said the offerings would prove easy sales, as thousands of mainland investors were eager to bet on the start-up board, hoping to get rich overnight. On October 30, when the first 28 companies started trading on ChiNext at the Shenzhen exchange, they jumped at least 75.8 per cent from their offering prices. As of yesterday, the 28 firms were trading at an average 121.78 times their earnings last year.
On the Shanghai Stock Exchange, the average price-earnings multiple stood at 28.8 yesterday.
'An increasing equity influx could do little to cool the buying frenzy on the second board,' said Bohai Securities analyst Huang Feng. 'The stocks are still excessively overvalued, and the risks are increasing.'
Beijing launched the second board more than a decade after the government proposed setting up a Nasdaq-style market in 1998.
Regulators were wary of a boom-to-bust cycle on the market and decided to launch more than two dozen firms in the first batch, hoping to avoid price-rigging in the small-cap stocks.
After strong first-day gains, the 28 start-ups underwent a roller-coaster ride, as some investors took profits while others hunted for bargains.
The total market capitalisation of the companies stood at 153.5 billion yuan yesterday, up 9.6 per cent from October 30.
The China Securities Regulatory Commission has approved 42 listings for ChiNext, including the first 28 start-ups. Six other firms are awaiting final approval to begin the listing process.