Four mainland companies have priced their IPO at the top end of their ranges, thanks to the overwhelming demand for their shares that together raised US$1.42 billion late last week.
Corporate and individual investors keen to cash in on the success of the world''s fastest-growing economy oversubscribed the four firms'' shares by the hundreds. The companies are from entirely different backgrounds.
Shares of government-backed infrastructure firms are especially in demand, with many retail investors applying for bulk shares without even knowing the nature of the company, stock analysts said yesterday.
China Communications Services Corp, sponsored by Goldman Sachs and China International Capital Corp, raised US$365 million after pricing its IPO at the top end of the changed range of HK$1.70 to HK$2.20.
The country''s top telecom engineering and technical services provider had originally set its price range between HK$1.56 and HK$1.96, but a few days ago it upgraded that after its road show evoked a strong demand.
"Investors both institutional and retail are buying into shares issued by government-backed enterprises, particularly those engaged in infrastructure, which is a key issue in the central government''s 11th Five-Year Plan," Phillip Asset Management director Louise Wong said.
"As for the strong demand for China Communication Services, it is a great player in the upcoming 3G market and would benefit because of its need to upgrade the mainland''s telecom system, as voiced by the government earlier," Wong said.
"A considerable number of retail investors are simply crazy about mainland IPOs, they don''t even know what exactly China Communications Services is doing but very readily placed as many orders as possible."
Kingboard Laminates, a spin-off of Kingboard Chemical Holdings, accounted for the highest proceeds among the four deals, raising US$745 million after pricing its share at HK$7.73 each. Individual investors had applied for twice as many shares they actually got.
Though its IPO raised only US$32.6 million, the smallest amount among the four, bathroom electrical appliances maker Aupu Group Holding evoked a strong demand to fix its IPO price at the top end of HK$1.23.
Even more in demand, however, was Zhaojin Mining Industry, the booming gold mining company based in Northeast China''s Shandong Province. Sponsored by Cazenove and UBS, the firm raised US$282 million.
Zhaojin fixed the price at the top of its HK$9.8-to-HK$12.68 range, and its institutional and retail portions were 200 and 500 times oversubscribed.
Speaking on the mainland companies'' IPOs in Hong Kong, Wong was especially optimistic about China Communications Services and China Communications Construction Corp''s future.