SIPD targets $2.2b in new listing bid

Shandong International Power Development (SIPD) has joined a growing list of companies to capitalise on the bullish market by making a fresh bid this week to raise up to $2.2 billion in a Hong Kong listing.

It is SIPD's fourth attempt to list in Hong Kong. Its most recent bid in February was derailed due to poor market sentiment and heightened concerns about mainland companies following the collapse of Guangdong International Trust and Investment Corp (Gitic).

In a presentation yesterday, vice-chairman Cheng Hongyuan told analysts the company recorded 19.9 per cent growth in pre-tax profit in the first five months and expected full-year electricity sales to rise 5 per cent over last year.

Net profit is projected to climb 15.34 per cent this year to 1.06 billion yuan (about HK$987.92 million), up from a net profit of 919 million yuan last year.

About 1.275 billion H shares - or 25 per cent of the company - will be sold at between $1.38 and $1.73 a share, putting the offer on seven to nine times this year's projected earnings.

While the issuing particulars remain about the same since February - US power company Southern will still subscribe for 40 per cent - the issue will be priced more attractively than other power stocks and the sector average following sharp gains built up since February.

The H-Share Index has rocketed 78.68 per cent in the past four months, with Beijing Datang Power Generation advancing 42.64 per cent and Huaneng Power International 65.27 per cent.

Underwriters said the initial response had been encouraging and analysts were optimistic about SIPD's latest listing bid.

Worldsec International analyst Keith Li said: 'This represents a reversal of sentiment towards mainland companies, having discounted the negative factors earlier this year.

'Infrastructure stocks, including toll roads and power plays appear to be more attractive than cyclical and commodity-related stocks because they generate steady income for investors amid difficult times.' Mr Li said infrastructure stocks were also well positioned to cash in on the mainland's policy shift towards the sector, which made loans easier.

New listings, Page 3