H-share candidate Jiangsu Expressway Co, the toll-road development arm of Jiangsu province, has adopted a conservative approach in valuing its main asset - Shanghai-Nanjing Expressway - according to listing sponsor HSBC Investment Bank Asia.
Responding to analysts' claims the value was an aggressive one, the bank's corporate finance director, Herbert Hui, said: 'The asset valuation is reasonable and is on the conservative side.' Independent valuer Sallmanns (Far East) has put the expressway's value at 12.76 billion yuan (about HK$11.84 billion).
'We forecast the expressway will have its capacity of 55,000 vehicles saturated in 2020,' Mr Hui said.
'If we were aggressive in the valuation, we should have expected the saturation to come earlier.' The valuation assumes that the expressway will have its toll increased 25 per cent every three years from this year to 2002.
Mr Hui said it would represent an average 8 per cent rise in tolls a year, in line with the province's inflation rate.
Jiangsu Expressway, chaired by Xu Huaqiang , who is also head of the Jiangsu Communications Department, is the last H-share flotation before the handover. Its shares will begin trading on the stock exchange on June 27.
HSBC Investment's managing director of corporate finance and equity capital markets division, Eamonn McManus, said the response to the company's placement had been 'overwhelmingly strong'.