Guilin Sanjin Pharmaceutical, the first company to launch an initial public share offering on the mainland after an unofficial nine-month ban, may raise as much as 920 million yuan (HK$1.04 billion), nearly 50 per cent more than the previous target, as it considers a higher price range.
The company, which started price consultations Monday, will probably set the share price at 20 yuan, at the high end of the range, according to brokerage sources.
That price would be 33 times its earnings last year and 28 times expected earnings this year, Changjiang Securities said in a report.
The drugmaker plans to raise 630 million yuan by floating 46 million shares on the SME Board of the Shenzhen Stock Exchange.
A higher price for Guilin Sanjin shares will reflect the regulator's determination to make pricing market-driven and discourage buying frenzy on new shares that normally drains liquidity out of existing stocks.
Unlike in the west, the China Securities Regulatory Commission has the final say on the price of an A-share offering.
Before the ban, many listing candidates deliberately set offer prices at low levels to make the deal popular, as that would allow investors to reap a huge profit when the stock debuts on the market.
