Shenhua Energy shares surge 83% in Shanghai debut
Updated: 2007-10-09 11:00
China Shenhua Energy Co, the country's biggest coal producer, nearly doubled on its trading debut in Shanghai today after investors applied for a record 2.66 trillion yuan (US$354 billion) of stock.
Shenhua opened at 68 yuan per share, jumping 83.83 percent from its initial price of 36.99 yuan, the top of its indicative range. It rose to 69.97 yuan at 9:57am.
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Investors ordered 40 times the stock on offer on optimism Shenhua will perform as well as the last seven companies to hold first-time share sales in the mainland, which on average doubled on their trading debut.
Shenhua will use the proceeds to buy mines and expand output to meet demand in the world's fastest-growing major economy, where coal prices have jumped to a record.
“Mainland Chinese investors are willing to tag high value multiples to leading energy companies such as Shenhua, which is among the best positioned to meet China's unquenched demand for energy,'' Lei Wang, co-portfolio manager of more than $16 billion at Thornburg International Value Fund in Santa Fe, New Mexico, was quoted by Bloomberg as saying.
Shenhua Energy's Hong Kong traded shares gained 1.8 percent to HK$45.80 yesterday.
Its Hong Kong-listed shares have more than tripled last year. They are trading at 42 times last year's earnings, still less than the 54 times average for CSI 300 Index, the world's best-performing stock market this year.
Shenhua Shanghai shares are trading at 65 times estimated full-year earnings. China Construction bank, which climbed 32 percent on its first day of trade last month, is trading at 46 times earnings.
Domestic shares, which are off limits to most foreigners, are typically priced at a discount to Hong Kong stocks, driving gains on debuts. Stocks on the Hang Seng Index trade at about 17 times earnings.
Shenhua sold 1.8 billion yuan-denominated shares. The sale surpassed the US$8 billion raised by Russia's VTB Group in May. The amount is also a record for a domestic stock offering, exceeding the 58 billion yuan raised by China Construction Bank.
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