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High IPO Bar Set by Ping An
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Ping An Insurance (Group) Co, China's second-largest life insurer, yesterday placed its Shanghai initial public offering (IPO) price at the upper limit of 33.8 yuan apiece, the firm announced to the Shanghai Stock Exchange.
Ping An's offer price is higher than all other such bids made by other financial stocks on the A-share market, vaulting Ping An into the position of the world's largest insurance IPO.
The selling of Shenzhen-based Ping An’s 1.15 billion shares is set to raise 38.87 billion yuan. The subscription period for Ping An's A shares saw around 1.1 trillion yuan being frozen. The company’s listing on the Shanghai Stock Exchange is to take place on March 1 and will become a constituent stock on the Shanghai Composite Index on its 11th transaction day.
"The listing of Ping An includes its securities, trust, banking and asset management services. It is the first diversified services financial stock to list on the Shanghai bourse," said Zhang Yidong, an analyst at Industrial Securities.
Ping An will become the second Chinese insurer to list on the Shanghai Stock Exchange, following China Life, which debuted on January 9.
Its earning per share in the first nine months of 2006 was 0.59 yuan, with net asset per share climbing to 5.55 yuan. Ping An is currently China’s second-largest life insurer and third-largest property insurer.
Despite this, Ping An's IPO price is 1.8 times that of China Life, its largest competitor, which set the price at 18.88 yuan. Yesterday, China Life’s stock rose 2 percent to close at 36 yuan at the Shanghai bourse, although its H shares took a mild drop of 0.86 percent to close at 23.05 yuan.
"Ping An will have a higher profitability than China Life because of its more diversified services, making it more profitable," said Zhang at Changjiang.
Ping An’s market base is strong in China's urban hubs, such as Beijing and Shanghai, while China Life, the State-owned insurer, has capitalized markets in second- and third-tier cities, according to Zhang.
"We expect Ping An's share price to pass 50 yuan apiece on the first transaction day due to the price premium to China Life's H shares," said Zhang. In comparison, Ping An's H shares were down 0.65 percent to close at HK$38.1 yesterday.
(China Daily February 15, 2007)
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