Shares of China National Materials (Sinoma), the world's largest cement equipment and engineering services provider, rose nearly 35 percent yesterday in their Hong Kong debut, as investors hoped to cash in on the pre-Olympics construction boom.
Sinoma's shares closed at HK$6.07, up from the HK$4.50 initial public offering (IPO) price. The company raised some HK$3.86 billion in a share sale that received 239 times subscription in its retail tranche, fueled by investors banking that the 2008 Olympic Games and the 2010 World Expo will generate major construction material orders.
"Sinoma outperformed in its debut," said Dickie Wong, director of Friedmann Pacific Securities Limited, adding that he expected the shares to jump about 20 percent.
Wong said investors were optimistic about the industry-leading company, even though market sentiment remains bearish.
"Shares will keep rising in the near term," said Eugene Law, CASH Securities Ltd's research director. He set a short-term target of $HK7.2, 60 percent higher than the IPO price.
Meanwhile, two other companies encountered a cool reception on their first trading day.
Handset component maker BYD Electronic finished at HK$11, up 2.3 percent from its HK$10.75 IPO price. And Vietnam Manufacturing & Export Processing (Holdings) Ltd, one of the country's leading makers of scooters and motorbikes, closed at HK$3.12, down 16.8 percent from its HK$3.75 IPO price.
"The mood is quite cautious, but the selling pressure has subsided and turnover is contracting substantially. Sentiment has stabilized," said Andrew To, senior stock analyst at Taifook Securities.
Clouded by uncertainties in global markets, Hong Kong stocks have suffered in recent weeks. Over 60 percent of all newly listed companies received cool responses from investors.
Sinoma is building new kilns to meet increasing demand for cement in China, the largest market for the construction material. Proceeds from the IPO will also be used to increase production of glass fiber, according to a company statement.
The company controls about 90 percent of China's market for cement-producing equipment and related engineering services, as well as 22 percent of the global market, the document said.
The IPO was arranged by BOC International (Holdings) Ltd and UBS AG.
(China Daily December 21, 2007)
