Hopes for an initial public offering bonanza on the mainland were dashed yesterday after drug maker Jiangsu Aosaikang Pharmaceutical halted its fundraising process because of concerns it was too big.
Aosaikang said yesterday it would resume the share offering at an appropriate time, although there was speculation the regulator had ordered its suspension because it planned to investigate the company.
Beijing reopened the listing market this month for the first time since October 2012, and more than 50 companies are expected to launch share sales either on the Shanghai or Shenzhen stock exchanges this month.
Aosaikang had planned to raise nearly four billion yuan (HK$5.1 billion) by offering 55.46 million shares at 72.99 yuan each, or 67 times its earnings in 2012.
Subscriptions to the shares were scheduled to begin yesterday but the company said it had decided to delay the offering after discussions with underwriters amid concerns about the "big IPO volume".
It was the first company to call time-out on an offering following the lifting of the suspension on new listings.
China Securities Regulatory Commission spokesman Deng Ge denied the delay was the result of an order by the regulator.
At a press conference in Beijing, Deng said the CSRC would closely monitor the market to protect its healthy growth.
New share sales were suspended in late 2012 in a bid to bolster investor confidence, but the market still lost 6.7 per cent last year.
The CSRC lifted the ban at the end of last year to create a fundraising channel for cash-hungry firms, clearing the way for a flood of companies that had passed listing reviews before October 2012.
The flood of new shares is set to dilute existing holdings, with retail investors battered by worries of a further decline in the market.
"Trading existing shares on the market is dangerous, and we would rather play risky new shares to chase profits," said retail investor Zhang Zhichun.
The first two offerings following the 15-month hiatus were heavily oversubscribed this week, drawing a combined subscription of 128 billion yuan.
Guangdong Xinbao Electrical Appliances was 95 times oversubscribed while the capital tied up in new shares sold by Zhejiang Wolwo Bio-Pharmaceutical was 176 times the offering size.
The CSRC said yesterday it would not start vetting new listing applications until March, in an apparent effort to soothe investor concerns about an influx of fresh equity.
Analysts expect more companies to delay their fundraising in the coming weeks.
The Shanghai market fell 0.7 per cent yesterday, raising its loss for the year so far to 4.9 per cent.
The CSRC said the new listing mechanism would protect investors' interests because it aimed at curbing lofty offering prices. But Aosaikang's price-earnings ratio of 67 raised analysts' eyebrows, and they warned that a sharp decline was likely after its listing.