Jinqiao listing stands out among recent issues

THE one recent success story amongst new Shanghai B-share issues is Shanghai Jinqiao Export Processing Zone. Jinqiao was brought to the market by Shanghai Hai Tong Securities and Jardine Fleming.

Shanghai Hai Tong has taken a pragmatic attitude to B-share pricing and its issues have gone well. But, as a result, the house obtained hardly any new issues in 1992, because it advised potential corporate clients to be realistic, while other securities firms were promising price-earnings (P/E) ratios of 20.

Jinqiao came to the market at US$0.34 per share and, since its listing, has traded at a premium. Now five cents above the issue price, it is the highest turnover stock of all Shanghai B shares.

The 1992 PE ratio at issue price was only 8.3, falling to 6.6 in 1993 and 4.3 for 1994.

At the current share price and with the yuan's fall, the 1993 P/E has risen to about 11 and for 1994 to seven.

Jinqiao's issue was about 10 times oversubscribed and showed confidence in the long-term attractiveness of Shanghai's Pudong area.

The company owns four square kilometres of land in Pudong and is putting in the necessary infrastructure. At the issue price, the shares were offered at a discount to the A shares of a staggering 92 per cent - this has now dropped to 83 per cent, with the rise in the price of the B shares. Locals appreciate property companies and any relaxation in letting locals buy B shares would probably benefit Jinqiao.