Chinese property developer Beijing North Star Co Ltd yesterday started selling A shares worth up to 3.6 billion yuan (US$453 million) to fund its investment in projects for the Beijing Olympics.

 

The company will issue as many as 1.5 billion yuan-denominated shares in its Shanghai initial public offering, it said in a statement yesterday to the Shanghai Stock Exchange.

 

Beijing North Star added that it had set the price range of the shares at between 2.35 yuan (29 US cents) and 2.4 yuan (30 US cents).

 

Institutional investors were able to subscribe to the shares from yesterday, while individual investors can purchase them from next Monday.

 

An online promotion will be held on Friday, the company said, adding that China Galaxy Securities Co is arranging the sale.

 

Funds raised from the public offering will help finance the construction of the Olympic Media Village and the Beijing North Star Building, the company said in its prospectus published last week.

 

The company said that the two projects require a total investment of over 3.3 billion yuan (US$412.5 million).

 

The A-share sale will help solve the company's capital shortage, according to market analysts.

 

He Jiangchuan, general manager of Beijing North Star, said earlier this year that the company required at least 14 billion yuan (US$1.75 billion) for its work over the next three to five years.

 

Beijing North Star, which develops residential, office, hotel and retail projects in the Chinese capital, sold bonds worth 1.5 billion yuan (US$187.5 million) in May to finance its construction of the Olympic Park National Convention Centre and related facilities.

 

These Olympic-related projects will be completed by the end of next year, and are expected to generate profits for the company later.

 

"The company is able to have stable growth and generate returns for investors, although the set price/earning ratio of 26 times is relatively higher," said a property analyst who declined to be named.

 

The property developer registered a 48 percent year-on-year growth in its first-half profit.

 

Its net income increased to 182 million yuan (US$22.8 million) from 123 million yuan (US$15.4 million) a year ago.

 

The company said that the rapid growth was due to higher sales and improved cost control. Its sales during the first half of this year rose 14.6 percent to 1.5 billion yuan (US$187.5 million).

 

The company will be listed on the Shanghai Stock Exchange before October 18, with its A shares accounting for less than 45 percent of its total stocks.

 

Its Hong Kong-listed shares fell 1.7 percent to HK$2.31 (30 US cents) yesterday. The stocks have gained about 20 percent this year.

 

(China Daily September 20, 2006)