China Shipbuilding raises $2.2 billion in IPO
10 Dec 2009
China Shipbuilding Industry Corporation (CSIC), one of the country's largest shipbuilders, has raised 14.7 billion yuan ($2.2 billion) through a heavily subscribed IPO, the third largest in China this year.
Beijing-based CSIC is one of China's largest shipbuilding and ship repairing groups. Currently, the group has seven shipyards with an annual building capacity of five million deadweight tonnage (dwt), covering all types of vessels ranging from merchant ships and offshore platforms to advanced naval vessels.
In spite of a bleak outlook on the shipping industry worldwide due to poor credit availability and slow recovery in global trade, the issue received an overwhelming response from investors, with oversubscription reaching 65 times, tying up about 961 billion yuan.
The final price was fixed at the top end of 7.38 yuan per share in the 6.15-7.38 yuan band, typical of Chinese mainland companies. The shipbuilder has sold 1,995 billion equity shares, which are to be listed in the Shanghai Stock Exchange, according to a stock exchange filing yesterday.
The price values CSIC about 42 times its 2008 earnings on a fully diluted basis which is much higher than the industry average of 25 times and 18 times for rival China State Shipbuilding Corporation (CSSC).
Some analysts consider that the issue is overpriced as the company's current year expected earnings are at 0.21 yuan per share, while 7.38 yuan price tag is 35 times PE.
