China Railway listing draws 3.4 trillion yuan
China Railway Group's dual listing got an enthusiastic response yesterday with investors in Hong Kong and Shanghai bidding up the offering prices to the top of their ranges.
China Railway, the world's third-largest construction contractor, will raise 22.4 billion yuan in Shanghai at the top of its indicative range by issuing 4.675 billion shares at 4.80 yuan per share. Sources said the issue, which drew 3.37 trillion yuan, was 263 times oversubscribed.
The firm is also raising HK$19.2 billion in Hong Kong by marketing 3.326 billion new H shares at between HK$5.03 and HK$5.78 each.
Chairman and executive director Shi Dahua said the firm chose a dual listing to catch the A-share market bull run and enhance its global image by listing in Hong Kong. 'Both valuations are reasonable,' he said.
Market sources yesterday said the international offering for the H shares was oversubscribed 15 times. It is expected that the railway firm's H-share offering to retail investors from today until next Wednesday will receive overwhelming orders. The stock will debut on the Shanghai exchange on December 2 and in Hong Kong on December 7.
Infrastructure construction accounts for about 88 per cent of China Railway's total revenue. The firm also engages in infrastructure surveying, design and consulting, railway-related engineering equipment, property development and mining.
Executive director and president Li Changjin said the company would further develop its property segment because it contributed the highest profits among all its businesses.
'The gross profit margin of this sector is 39 per cent,' said Mr Li. 'Our involvement in property is a way of synergising our upstream, midstream and downstream businesses.' The firm will spend two billion yuan of the funds it raises on the mainland on property development.
Mr Li said China Railway's development of mining did not deviate from its main business line as the technology and equipment used in mining and infrastructure construction were the same.
