China CNR mulls Hong Kong IPO
Cash-strapped mainland rail giant may try to raise HK$11.3 billion in a local flotation this year
China CNR, burdened by soaring debt and shrinking cash, may raise HK$11.3 billion from an IPO in Hong Kong this year.
The state-owned enterprise (SOE) has got the approval for an H-share listing on the main board of the Hong Kong stock exchange from the State-owned Assets Supervision and Administration Commission (Sasac), the Shanghai-listed firm announced yesterday.
CNR and CSR Corp, an SOE listed in Hong Kong and Shanghai, dominate the mainland train manufacturing sector.
CNR planned to issue up to 1.82 billion shares in its Hong Kong listing, equivalent to 15 per cent of its total shares, the company said in a recent announcement. Assuming CNR's Hong Kong IPO price equals its closing Shanghai share price of 4.89 yuan (HK$6.20) yesterday, the firm's Hong Kong initial public offering would raise HK$11.3 billion.
However, the actual amount of money raised in any Hong Kong listing would depend on market conditions, said Karen Li, a JP Morgan equity analyst.
"We're positive on the Chinese train market. CSR's orders in the fourth quarter were way bigger than what people expected. We expect more orders for high-speed trains in future," Li said.
On Tuesday, CSR announced it had won 25.63 billion yuan in orders for high-speed trains. On October 21 last year, CNR announced 20.95 billion yuan in orders for trains.