DESPITE a plunging H-share market, Chengdu Telecommunications Cable wants a higher issue price for its H shares because of strong demand for the international portion of its placement.
Shares of the Chinese telecommunications cable maker will be issued at $2.80 each, pricing them at 11.5 times 1995 earnings, said a source close to sponsor Credit Lyonnais Securities. It would raise $448 million.
Based on this year's projected earnings of at least 75 million yuan (about HK$68.02 million), the multiple will be 10.25 on weighted average earnings per share of 30 fen and 13.1 on fully-diluted earnings per share of 23.5 fen.
Chengdu Telecom Cable will issue 160 million shares with half for an international placement and half offered in Hong Kong from next Tuesday to Friday.
The source said the placement portion had been 18 times subscribed at the issue price under the book-building system which measured investor appetite for a stock.
'Chengdu comes out very cheap,' said the source, who compared the Chinese stock with other telecommunications cable makers in the Asian region which were trading between 20 and 35 times 1994 earnings.
The company has tentatively set an issue price of $2.38 to $2.58, with a 1995 price earnings multiple between 10 and 11, based on the figures of a Credit Lyonnais Securities report which was delivered to fund managers last Friday at a presentation.
