CHINA Cosco (stock code: 600428)'s shares jumped 93 percent yesterday on their first day of trading on the Shanghai Stock Exchange, closing at 16.38 yuan (US$2.15).
The nation's largest container shipping firm had issued 1.78 billion A-shares in an offer that the public oversubscribed by 162 times. The shares were offered at 8.48 yuan, a price analysts said was considerably undervalued.
The share opened yesterday at 15.52 yuan, an 83-percent surge.
"The sharp rise of China Cosco's share price today (Tuesday) was not unexpected. Most initial public offers will see very large increases on day one of trading," said Ji Lijun, an analyst at Shanghai Securities.
"In this case, the cause of the rise is a combination of the undervaluation of the initial price and the public's optimism about the company's prospects."
The stock did not fall below its opening price, rising at one point to 17.15 yuan, before retreating.
The Shanghai Composite Index added 0.82 percent to 3,973.37 points yesterday.
Ji, however, warned that the share price might have risen too much and now "looks a bit on the high side."
Speaking to reporters shortly after the official opening ceremony of its debut at the exchange building, China Cosco's chairman Wei Jiafu said the return of the firm's shares to the Chinese mainland marked an important milestone for the company and had been a culmination of "years of strategic planning for the firm's development."
"We will continue to strive to fulfill our goal of maximizing profitability, company value and shareholder return," said Wei, who was clearly in high spirits.
He also said the state-owned company set a low offer price because it wanted to "reward Chinese stock investors."
Officials were optimistic about the shipper's future growth, pointing to China's booming economy and a container shipping industry growing steadily at eight percent per year.
The Tianjin-based company aims to add 20 berths annually to its current 115 and to double its transport capacity to 800,000 TEUs (20-foot equivalent units) by 2010.
The firm will use the 15.1 billion yuan raised on 12 new vessels and the purchase of 51 percent of a logistics firm from its own state-owned controlling shareholder.
China Cosco's Hong Kong shares closed 2.63 percent higher at HK$11.70 (US$1.54).