China Shenhua Energy Co, the nation's largest coal producer,
plans to raise 66.6 billion yuan (US$8.9 billion) in its initial
public offering in Shanghai to fund expansion, to be the biggest
share sale this year.
Beijing-based Shenhua, listed in Hong Kong in 2005, will sell
shares to mainland investors for the first time this year. The
company will sell up to 1.8 billion A shares at 34.99-36.99 yuan
per share, accounting for 9.05 percent of its enlarged capital, it
said in a statement to the Hong Kong stock exchange today.
The listing at the Shanghai Stock Exchange is scheduled on
October 9.
The price will be at a discount to Shenhua's share price in Hong
Kong. The stock closed at HK$43.30 on September 21. Shares of the
company have more than doubled this year, outpacing the 29 percent
gain in the benchmark Hang Seng index.
The sale may exceed the US$7.7 billion China Construction Bank
Corp raised from selling nine billion shares this month.
It will use the proceeds to expand mines, power production,
railroads and harbors, and to fund acquisitions including coal
mines from parent Shenhua Group Corp.
Shenhua will use 16.7 billion yuan of the proceeds to invest in
19 coal, power and transportation projects. It will allocate 16
billion yuan to enlarge working capital and use the rest for other
projects and to buy coal and power assets from its parent.
The company will spend about 27 billion yuan by the end of 2009
to expand coal production, Chairman Chen Biting said last month.
The company targets an annual coal production capacity of 200
million tons by the end of 2010 and aims to have a power output
capacity of 20,000 megawatts, he said.
"The pace of asset injections will increase following the
A-share listing, which we see supporting the H-share price,"
Donovan Huang, a Hong Kong-based analyst at Nomura International
Ltd, said on September 20. He has a "buy" rating on the stock.
Shenhua Group has four coal mines with 60 million tons of coal
output that will be injected into Shenhua, Huang said. That
represents about 39 percent of Shenhua's annual output.
Shenhua's first-half profit surged 20 percent to 10.3 billion
yuan because of increased energy demand in the world's largest
consumer of coal. China uses the fuel to produce almost 80 percent
of its electricity.
Coal sales at Shenhua climbed 21 percent to 97.8 million tons in
the first six months of the year. Production rose 15 percent to
76.6 million tons while power generation jumped 56 percent to 36
million megawatt-hours, accounting for 29 percent of sales.
The sale would top that of VTB Group, Russia's second-biggest
bank, which raised US$8 billion in May in the world's largest
initial public offering this year.
China International Capital Corp, which is 34 percent owned by
Morgan Stanley, and China Galaxy Securities Co are managing the
sale.
(Chinadaily.com.cn September 24, 2007)
