Machinery maker first to test waters after end to IPO ban

Mark O'Neill

Market response to CAMC Engineering's Shenzhen share sale will set tone for others in listing pipeline

China CAMC Engineering, an exporter of machinery and technology, will be the first company to make an initial public offering on a Chinese stock exchange following a year-long ban on new listings.

The company yesterday said it planned to sell 60 million shares on the small and medium-sized enterprises (SME) board on the Shenzhen stock exchange on June 5, with trading due to start on June 19.

Beijing chose a small company to test market sentiment for major listings later this year, analysts said.

China last week announced an end to its one-year ban on listings, imposed to prevent a glut of stock supply as the government sought to make more than US$250 billion of state-held shares tradable.

Companies representing about 70 per cent of the market values of the Shanghai and Shenzhen stock markets have either completed conversions or started the process, according to the China Securities Regulatory Commission (CSRC).

CAMC will be the first company to list on a Chinese stock exchange since the exchanges were reopened in 1990 to have all of its shares tradable.

A successful listing will open the way for 30 other companies approved by the CSRC, including magnetic-material manufacturer Hengdian Group DMEGC Magnetics and Tongzhou Electronics, a maker of cable-television equipment.

Five of the 30 want to list on the Shenzhen SME board.

The SME board in Shenzhen has only 50 listed companies, all of which had finalised the reform of their non-tradable shares by November last year.

Chen Hongqiao, a deputy general manager of the Shenzhen exchange, said last week the resumption of listings would bring fresh blood to the SME board.

Domestic listings also are planned for blue-chip companies such as China Mobile and Bank of Communications.

Brokers said CAMC had a record of steady revenue and profits and was more credible because many of its operations were abroad.

The firm has published a list of the projects it has completed abroad, including in Burma, the Philippines, Venezuela, Sudan, Zimbabwe and Kenya.

CAMC said it would use the money raised from the listing to buy agricultural machines for a project in the Philippines. Most of its profits over the past three years have come from international operations.

CAMC said the seven companies that held a total of 130 million of its shares would not sell or trade the stock for three years after the listing.