Success of CSCL offer hinges on pricing

With poor market sentiment chilling investor enthusiasm and cheap investment alternatives widely available, analysts say pricing will be the critical factor for China Shipping Container Lines' (CSCL) US$2 billion share offering.

An impressive 18-month run for the global shipping sector, driven by high freight rates and bourgeoning Asia trade volumes, might be reaching its peak, taking some of the shine off mainland transportation plays, fund managers said.

Avanta Investment fund manager Steve Kwok said: 'There are a lot of cheap stocks in the market, such as raw materials companies. We have a lot of options.'

Peter Chau, fund manger for TAL CEF Global Asset Management, said CSCL's pricing was important because other shipping lines were trading at reasonable price-to-earnings (PE) ratios. Hong Kong's Orient Overseas International (OOIL), for example, is trading at a PE ratio of about four.

'The market is speculating that CSCL's PE ratio will be set at about seven to nine times, which would be only marginally attractive.'

But Yang Liu, managing director for Atlantis Investment Management (Hong Kong), said CSCL's fundamentals and its strong position in the booming China market would help lure investors. 'We like this company,' Ms Liu said.