Retail demand for the mainland cement maker's shares, due to list on Friday, could be up to 500 times subscribed
An overwhelming response to Great Wall Automobile Holding's public offer has not clouded investors' interest in Chia Hsin Cement Great China Holding, a spin-off of Taipei-listed Chia Hsin Cement.
Chia Hsin's initial public offering (IPO) of 28.6 million shares is expected to be more than 100 times subscribed, according to market sources, while market talk suggested the retail portion could be 300 times covered.
Great Wall Automobile's IPO, which will close on Monday, has sent investors scurrying for shares, forcing the sponsor to print one million extra application forms. Some analysts estimate the retail tranche could be 400 to 500 times subscribed. The mainland carmaker is in the process of selling $1.52 billion in stock, of which 10 per cent is earmarked for retail investors.
As a result of the oversubscription for Chia Hsin's offer, an additional 114.4 million shares would be clawed back from the placing tranche to the public to satisfy demand, according to the prospectus. The sponsor, Polaris Securities, had earlier said the placing tranche was 6.6 times covered.
The firm, a mainland-based high-grade cement maker, has raised $423.28 million by offering 286 million shares at $1.48 each. Proceeds raised would be used to expand its production facilities. Trading of the shares will start next Friday.
The spin-off unit had reported impressive results last year, said Benjamin Lin, an analyst at Fubon Securities. It posted net profit of 130 million yuan on revenue of 570 million yuan, with a gross margin of 33 per cent and an operating margin of 10 per cent.
