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SCMP Reporter

Shares of Nanjing Panda Electronics Co, one of China's largest television makers, fell 6.1 per cent on their debut yesterday.

   The focus of the market was on two forthcoming Chinese share offerings as Panda ended $0.13 lower than its issued price at $2, after losing as much as $0.20, or 9.4 per cent. Turnover was 26.47 million shares worth $52.74 million.

  The Hang Seng China Enterprises Index, measuring price movements of H shares, skidded four points to 868.35 after gaining more than 9 per cent in the previous two sessions.

  Joyce Leung, a broker at Sun Hung Kai Investment Services, said she was surprised at the counter's dismal debut, given the improved market sentiment towards Chinese shares after the interest rate cut announced by the People's Bank of China on Tuesday.

  'The market's attention is now on recovery plays and the initial public offerings by Guangzhou-Shenzhen Railway [Guangshen] and Shanghai Industrial Holdings,' she said.

  Guangshen, which will open a public share offering on Monday, is the largest H-share flotation in more than two years, raising up to $3.64 billion.

  It is pitching its shares between 10.1 and 11.9 times earnings.

  Shanghai Industrial, although not an H share, has strong backing from the Shanghai government, which plans to inject assets into it in the future.

  The company's shares will open for subscription on May 21, raising $800 million. It is asking for a multiple between 8.7 and 10.3 times.

  Pai Husan, associate director of Indosuez Asset Management, said: 'Guangshen is quite sizeable and Shanghai Industrial seems like a very good concept stock.'   As Guangshen would take up a heavy weighting in the China share index, he said fund managers would be interested in the stock.

  Overseas funds would find its price-earnings ratio reasonable, in view of its being an infrastructure play, he said.

  The Hong Kong share offering of Panda has drawn applications equivalent to 1.01 times the shares on sale, the lowest for an H-share company.

  The subscription rate foretold yesterday's performance.

  'I think people are worried about the electronics industry,' a fund manager who did not subscribe to the issue said.

  Panda, whose president is Lu Rongchang , is facing severe competition because of excessive supply. The mainland's biggest television maker, Sichuan Changhong, has lowered prices to promote sales, triggering concerns of falling margins at Panda.

  Chairman Chen Xiangxing said the company would rather use commission bonus as incentives for agents to stimulate sales. 'Basically, our product price does not drop.'   He said the company's gross margin would be maintained as a result of lower production costs.



H share Nanjing Panda suffers 6pc fall on debut