China's securities regulator on Thursday approved plans by China Construction Co. Limited, the country's biggest real estate developer, for the second initial public offering (IPO) this year.
The company got the nod from the China Securities Regulatory Commission (CSRC) for its plan to issue 12 billion A-shares. It expected to raise more than 40 billion yuan (5.71 billion U.S. dollar).
The first IPO approval was granted to China Railway Construction Corporation Limited (CRCC) on Jan. 23, one of the nation's largest road project contractors, with an issuance of 2.8 billion shares.
According to a pre-release prospectus, the raised capital will be used to fund big construction projects, infrastructure investment, commercial housing development and machinery equipment purchase.
China International Capital Corporation will lead the underwriting, according to the prospectus.
As a heavyweight in construction and land development, the company made its name by building the National Aquatics Center, the Central China Television headquarter and the Shanghai Financial World Center, the highest skyscraper in China's mainland.
Following an industry reshuffle, the company was reorganized at the end of last year by the parent company of China State Construction Engineering Corporation (CSCEC) which hold up to 94 percent of the shares. PetroChina, Baosteel and Sinochem Corporation accounted for 2 percent each.
Sales revenue of the group totaled 168.3 billion yuan last year, up 26.4 percent from a year ago. Net profit earned by the parent company reached 4.92 billion yuan in 2007, up 103.9 percent year on year.
Analysts said China Construction's A-share debut, along with the remarkable performance given by the CRCC and China Railway Group Limited, would add more appeal for the construction shares
China's construction and property industries were among the sectors most affected by the nation's macro-economic policies in fears of rising inflation and investment overheating.
Thanks to the booming demand for infrastructure and railway expansion in central and western China, steady growth for the construction shares, notably for China Construction, was still widely expected, said Jiang Kongliang, Haitong Securities analyst.
Less than 50 stocks were public in mainland bourses in the first five months of this year, including only four large-caps. This was in contrast to 123 stocks listed last year, of which 10 percent were large-caps.
(Xinhua News Agency June 6, 2008)
