Wuhan Iron and Steel (Wugang) will brave tough market conditions and push ahead with an H-share listing to raise between US$150 million and $200 million. The company, which passed its listing hearing last week, is hoping conditions will stabilise for the issue to proceed as early as next month, a source said. Merchant bankers described the issue as a challenging initial public offering given the volatile stock market and cool sentiment towards iron and steel stocks. One banker said: 'It's not only difficult to sell the issue to investors but the pricing of it will also be difficult'. He said that H shares Angang New Steel and Chongqing Iron and Steel were now trading at a very low price earnings (PE) multiple of about four times. Angang New Steel was listed at a multiple of 7.6 times last year while Chongqing Iron and Steel was pitched at a more aggressive 8.4 times but was only 0.77 times subscribed. Merrill Lynch (Asia Pacific) is sponsoring the long-awaited listing of Wugang, which was among the second batch of mainland enterprises selected for overseas listing in 1994. Its listing plan, put off for years because of the bad performance of the mainland's iron and steel sector, was again delayed by the Asian financial turmoil late last year. Analysts were concerned about the prospect of Wugang after Baoshan Iron and Steel, the country's most profitable steel-maker, reported a 38 per cent fall in pre-tax profit for last year. Wugang's parent, Wugang Group, has an ambitious expansion plan, to boost production capacity by two million tonnes to eight million tonnes by 2000.
