Shares of Ping An Insurance (Group) Co are expected to fall if its shareholders approve the firm's secondary offering plan today, analysts said.
Shenzhen-based Ping An will hold a shareholders' meeting today to vote on its plan to sell up to 1.2 billion new yuan-backed A shares, or 14 percent of its expanded capital, plus 41.2 billion yuan of six-year convertible bonds with detachable warrants.
Ping An needs the go-ahead from at least two-thirds of its shareholders to carry out the plan. Ping An has a total of 4.79 billion yuan-backed A shares. The board, which represents 2.32 billion shares, already said it approved the plan, leaving senior managers to gain support from at least another 870 million shares.
Among the 870 million shares, owners of 300 million floating shares and strategic investors who have one hundred million shares may back the plan, Wang Xiaogang, an Orient Securities Co analyst, said.
The insurer's senior managers will have to gain support from investors holding the remaining 470 million shares, and this is where there is uncertainty.
"It is uncertain whether the plan can be approved but we see a 60 percent possibility for it to be approved,'' said Wang. "If the plan is approved, the rise in the share price will be curbed due to the big supply. If the plan is rejected, the firm's shares may rise significantly.''
HSBC Global Research said in a note yesterday that "shareholders will likely approve Ping An's share and bond issues.''
However, investors generally will be looking for management to map a convincing strategy on the use of the proceeds, the note said.
Even if its shareholders support the plan today, Ping An has to gain regulatory green light.
"We believe it is highly likely that the offering will be delayed to the second half at least,'' said Dorris Chen, a BNP Paribas analyst.
Yuan-backed A shares of Ping An have lost 28 percent since it disclosed the plan in January. It ended at 67.10 yuan in Shanghai yesterday, down 4.29 percent. | |