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Christine Chan

Hong Kong will see a spate of mainland listings in the next few months with at least five big state companies expected to raise about US$9 billion between them from initial public offerings.

 Leading the charge is the much-anticipated flotation of China United Telecommunications (China Unicom), which is aiming to tap at least US$1 billion from a dual listing in Hong Kong and New York by June.

 Other listing candidates include Baoshan Iron and Steel, the mainland's most profitable steel-maker, and a revived offering by CNOOC, the country's largest offshore oil producer.

 Also in the pipeline is China Petrochemical Corp (Sinopec) - the mainland's No 2 oil producer - and Jitong Communications, one of the mainland's handful of state-owned telecom operators.

 Apart from China Unicom, the listings are expected to take place in the third quarter, according to underwriters and analysts.

 The other state firms want to avoid competing for funds with China Unicom and are hoping to avoid the prevailing volatile market conditions.

 Analysts said the rush of offerings could be another litmus test of the appetite of foreign investors for mainland state companies following PetroChina's HK$22.32 billion flotation last month.

 'PetroChina's listing might not be a good yardstick because of its nature as a commodity stock, which tends to attract institutional investors more than retail investors,' Worldsec International analyst Keith Li said.

 Investor appetite for mainland companies had improved, helped by strong earnings growth reported by H shares last year, a brisk mainland economy and easing deflationary climate, he said.

 Mr Li was more optimistic about China Unicom's listing.

 'China Unicom will benefit from the scarcity value of mainland telecom stocks now enjoyed by dominant China Telecom (Hong Kong).'  China Telecom (HK) has seen strong gains since its 1997 listing as investors took positions ahead of an expected liberalisation of the mainland's telecoms sector.

 Beijing's expected entry to the World Trade Organisation this year is accelerating the push.

 China Unicom is expected to become a more integrated telecoms operator with business ranging from cellular to paging and long-distance fixed-line operations.

 According to analysts, the company has 4.5 million cellular subscribers in 12 coastal cities, about 40 million pager subscribers, and owns long-distance fixed-line operations and data communications services.

 China Telecom (HK), on the other hand, derives most of its income from cellular operations, with about 18 million subscribers in six provinces.

 Morgan Stanley Dean Witter and China International Capital are joint global co-ordinators for China Unicom's share sale.

 China Unicom's listing comes after the unwinding of its controversial China-China-Foreign joint-venture contracts with 40 foreign partners.

 Beijing has encouraged China Unicom to develop code division multiple access (CDMA) mobile-phone network technology to become a credible competitor to China Telecom.

 It plans to complete the first phase of its CDMA network by the middle of this year, handling 2.6 million users.

 Last year, China Unicom unveiled detailed plans to capture more than 30 per cent of the mainland's fast-growing mobile-phone and Internet-related markets in the next five years.



Leading state firms target US$9b