CHINA Railway Construction Corp rose less than expected on its debut in a subdued Shanghai stock market yesterday, after it raised a total US$5.4 billion in the world's largest initial public offering so far this year.
The lackluster performance was due mainly to a general weak sentiment, analysts said. The Shanghai Composite Index lost 3.59 percent yesterday, and is about a third below the record level it touched last October.
The Beijing-based construction contractor's A shares rose 28.19 percent to 11.64 yuan (US$1.64). They opened at 11 yuan and reached an intraday high of 12.18 yuan. Analysts had forecast the stock may close around 13 yuan.
Its larger rival, China Railway Group Ltd, gained 69 percent on its Shanghai debut in early December, but the stock has fallen 30 percent from its all-time high in January.
"China Railway Construction is clearly weaker than it should have been and that's mainly because of weak sentiment,'' said Wu Feng, an analyst at TX Investment Consulting. "The timing is not very good as China is due to release various macroeconomic data this week that could spur investor worries over further tightening measures.''
China Railway Construction had cut its share supply for the Shanghai portion of its IPO and postponed the share sale amid the weak market condition. Its shares will also start trading in Hong Kong on Thursday.
Still, China Railway Construction Chairman Li Guorui said he's confident of the stock's valuation. In terms of the value of overseas contracts, the firm is China's No. 1 construction company.
China Railway Construction is also pursuing mining development projects in Angola and Congo, President Jin Puqing said, without elaborating.
Based on yesterday's closing price, China Railway Construction trades at 35.5 times its estimated 2008 earnings, slightly lower than that of China Railway Group.