Nanning Baling Technology's failed initial public offering set the alarm bells ringing in the mainland's stock market as beleaguered investors start to shun once safe bets in the world's biggest IPO market.
Baling was forced to halt its offering process following unsuccessful price consultations with institutional investors, becoming the first mainland company to do so.
In a statement, only 19 institutions took part in the consultations that ended on Tuesday, just one fewer than the minimum of 20 participants required by the securities regulator. The rules governing listings stipulate that Baling, a maker of heat exchange products used in vehicle production, had to suspend its offering.
Baling planned to raise 298 million yuan (HK$358 million) by floating 18.9 million shares on the Small and Medium Enterprise board of the Shenzhen Stock Exchange. Some 3.78 million shares had been set for institutional and corporate investors in a so-called offline subscription.
Previously hundreds of powerful institutions including mutual funds, insurers and companies would flock to offline subscriptions as offering shares usually brought investors handsome first-day gains when the firm's trading debuted.
Institutions gave Baling the cold shoulder as they were not convinced of the company's earnings outlook, analysts said.
Baling's sales to SAIC-GM-Wuling Automobile accounted for 47 per cent of its total in 2008. In 2009, the percentage grew to 64.4 and the figure for last year stood at 60 per cent. The company's earnings would be largely affected if the carmaker found an alternative supplier to replace Baling, analysts said.