BEIJING, Jan. 21 (Xinhua) -- China Coal Energy Ltd. (HK:1898), the country's second largest coal manufacturer, has started its A-share initial public offering (IPO) roadshow from Jan. 21 to 23 in Beijing, Shanghai and Shenzhen.
The company told Xinhua that 75 percent of the shares would be offered online to individual and institutional investors on Friday, making it the country's highest ever online subscription ratio.
The remainder of the shares will be open to subscriptions from institutional investors from Thursday to Friday.
According to the prospectus released on Jan. 7, the company plans to issue up to 1.525 billion A shares on the Shanghai Stock Exchange, representing 11.51 percent of the company's capitalization after the IPO.
China Securities Regulatory Commission approved the company's IPO application on Jan. 11.
The proceeds would be used for the construction of major coal projects in northern Inner Mongolia Autonomous Region and northeastern Heilongjiang Province, and to supplement the company's operating capital.
China Coal Energy was exclusively initiated by China National Coal Group Corp. in August 2006 and was listed on the Hong Kong Stock Exchange in December 2006.
China Coal Energy's assets were valued at 55.29 billion yuan with net assets of 31.88 billion yuan by the end of June 2007. The operating turnover reached 16.93 billion yuan and net profits hit 2.44 billion yuan in the first half of 2007.
China Railway Construction Corporation Limited (CRCC), one of the nation's largest road and rail project contractors, is planning to issue 2.8 billion A-shares at Shanghai Stock Exchange.
One hundred and twenty-four companies were listed on the mainland's Shanghai and Shenzhen stock markets in 2007, raising more than 65 billion U.S. dollars, nearly triple the floated value in 2006, according to a survey by Beijing-based Zero2IPO, a leading consultancy company.
Eighty-five percent of the funds were raised by 12 major Chinese companies and banks, including PetroChina, the country's biggest oil producer, China Shenhua Energy, the nation's largest coal producer, and the China Construction Bank, the country's second largest lender.
Mostly state-owned enterprises (SOEs), the blue-chips stirred up investor excitement. The listing of PetroChina alone raised 66.8 billion yuan (9.2 billion U.S. dollars), making it the world's biggest IPO in 2007.
"The market trend in 2007 provided good opportunities for those SOEs to get into the market," said Ou Minggang, deputy editor-in-chief of "Chinese Banker" magazine.
Li Rongrong, head of China's State-owned Assets Supervision and Administration Commission (SASAC), reiterated in December that China encouraged eligible centrally administered SOEs to list on stock markets as a whole, or gradually inject their core assets into their listed arms.
The CSRC head Shang Fulin even invited overseas firms and Hong Kong-listed domestic companies to go public on the Chinese mainland in December, and the Shanghai Stock Exchange said it was considering introducing international firms that performed well in China.
The Shenzhen Stock Exchange is actively preparing for a NASDAQ-like growth board, expected to be established in the first half of 2008.
"The quick pace of IPOs on the mainland will probably continue in 2008," said Li Feng, a senior equity strategy analyst with China Galaxy Securities.
Experts believe the IPOs could prove effective in absorbing excess liquidity in China.
China's central bank announced last week it would raise the required reserve ratio for commercial banks by half a percentage point on Jan. 25.
The ratio would be raised to 15 percent, the highest since 1984,part of the stringent monetary policy. This was to siphon excess liquidity at banks and curb the overly-fast growth of credit.
Market observers predicted the tourism, catering and department store sectors would be the principal force for this year's IPOs as the earnings expectations of these industries was on the rise.
"Due to the recent U.S. economic recession signal and some uncertainty factors of the Chinese economy, the investors would be more cautious in this year's stock market investment," said Ou.
