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Carrie Lee

THE mixed reception given to the first of the nine mainland listings has led to a much more modest valuation being placed on the third issue - Guangzhou Shipyard International.

   The first official details of the issue, released yesterday, show that the company is to issue 145 million H shares at $2.08 each, valuing the company at 8.3 times earnings, or 9.5 times fully diluted, to yield 4.5 per cent.

   This compares with the 18 times earnings on which Tsingtao was floated and the 16 times value put on Shanghai Petrochemical, where the Hongkong offering was barely subscribed.

   Despite the muted response in the territory, both Merrill Lynch and Peregrine Capital are believed to be confident that the current roadshows in progress around the world will generate a better response for the international tranche of Shanghai Petro, and that they will be able to place the 668 million shares they took up in their own names.

  The Guangzhou prospectus, to be published today, will show a profit forecast of at least 85 million yuan (about HK$114.8 million at the official rate) for the year to December 31.

  Net profit last year stood at 67.7 million yuan. It was 47.5 million yuan in 1991 and 54.5 million yuan in 1990.

  Turnover was 848.7 million yuan last year, 586.4 million yuan in 1991 and 430 million in 1990.

  Of last year's turnover, 51.8 per cent came from shipbuilding, 38 per cent from container manufacturing, 2.5 per cent from ship-repairing and 7.7 per cent from other activities.

  Foreign currency revenue was US$83.2 million last year, US$82.1 million in 1991 and US$56.2 million in 1990.

  Underwriters of the $300 million issue include Schroders Securities and Sun Hung Kai Securities.

  Peregrine Capital is the lead manager of the issue, which is to be offered tomorrow.

  After yesterday's presentation, fund managers and analysts generally believe the issue to be well received.

  ''Its PE is attractive, and its export income is high - the highest among all the nine mainland enterprises approved to list in the territory,'' said Dao Heng Fund Management investment manager Ambrose Chang Chung-kwong.

  ''And its kind of business, unlike property investment, won't be affected by China's credit tightening,'' he said.

  Its container manufacturing would meet market demand as the volume of intra-regional trade was high, said Mr Chang.

  All of the containers the company makes are exported, mostly to countries in Asia.

  ''Its business relies mostly on Asia and is not much affected by the recession hitting the US and Europe,'' said Mr Chang.

  He expected an over-subscription for the issue of about 40 to 50 times.

  ''The only problem is the low market sentiment at the moment,'' he said.

  The shipyard is one of six Chinese yards capable of buildings ships of 35,000 deadweight tonnes or above.

  The company plans to undertake container and passenger transport between Hongkong and Guangzhou.

  It is also conducting a feasibility study on a joint venture development of a power plant in the city.

  Meanwhile, the fourth mainland listing, printing machine maker Beiren Co, will issue shares in Hongkong on Friday and will list them on the stock exchange from August 6, the New China News Agency says.

  The agency, quoting company officials, said Beiren would issue 100 million shares in Hongkong, representing 25 per cent of the company. The Chinese Government will retain 62.5 per cent ownership.

  The remaining 12.5 per cent of the company would be floated on China's domestic stock markets by the end of the year, it said, but gave no information on pricing.



Brokers confident on shipyard listing