China Construction's US$5.7b IPO gets nod - ResearchInChina
Date:2008-06-06
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CHINA'S securities regulator yesterday approved plans by China Construction Co Ltd, the country's biggest real estate developer, for a second initial public offering this year.
The company got the green light from the China Securities Regulatory Commission for its plan to issue 12 billion A-shares which are expected to raise more than 40 billion yuan (US$5.71 billion).
On January 23 the go-ahead for the first IPO was granted to China Railway Construction Corp Ltd, one of the nation's largest road project contractors, which issued 2.8 billion shares.
According to a pre-release prospectus, the proceeds from the IPO will be used to fund big construction projects, for infrastructure investment, commercial housing development and machinery equipment purchase.
China International Capital Corp will lead the underwriting, according to the prospectus.
As a heavyweight in construction and land development, the company made its name by building the National Aquatics Center, the Central China Television headquarters and the Shanghai Financial World Center, the tallest building on China's mainland.
Following an industry reshuffle, the company was reorganized at the end of last year by the parent company of China State Construction Engineering Corp which holds up to 94 percent of the shares. PetroChina, Baosteel and Sinochem corporations accounted for 2 percent each.
The group generated a sales revenue of 168.3 billion yuan last year, a jump of 26.4 percent from a year ago. Net profit earned by the parent company reached 4.92 billion yuan in 2007, up 103.9 percent year on year.
The remarkable performance by the China Railway Construction Corp Ltd and China Railway Group Ltd would add more appeal for the shares of China Construction.
China's construction and property industries were among the sectors most affected by the nation's macro-economic policies on fears of rising inflation and investment overheating.
Thanks to the booming demand for infrastructure and railway expansion in central and west China, steady demand for construction shares is still widely expected, said Jiang Kongliang, Haitong Securities analyst.
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