China Coal Energy raised HK$13.15 billion (US$1.69 billion) yesterday by pricing its shares at the top of the indicative range.
The country's second-largest coal producer, which sold a total of 3.25 billion H shares at HK$4.05 (52 US cents) each, the top end of its offering price range between HK$3.2 (41 US cents) and HK$4.05 (52 US cents), reported that its institutional and retail tranches had been oversubscribed about 50 and 170 times respectively.
China Coal Energy is just the latest firm to set its price at the top of the range in Hong Kong's red-hot IPO market.
"Local investors' enthusiasm for mainland coal stocks remains high, which very much cushioned China Coal Energy's fund raising in the market," said Fulbright Securities General Manager Francis Lun.
The company will formally begin to trade its shares on the Hong Kong bourse next Tuesday.
As the mainland's third coal producer seeking a listing in Hong Kong after Shenhua Energy and Yanzhou Coal Mining, China Coal Energy is now valued at 14.6 times its 2006 forecast earnings.
Top Chinese coal producer Shenhua Energy trades at 16.3 times forecast earnings, while Yanzhou Coal Mining's trades at 10.3 times its 2006 profits.
Shenhua's shares edged up 0.48 percent to reach HK$16.58 (US$2.13) yesterday. Yanzhou Coal gained 2.04 percent to close the day at HK$6 (US$0.77), beating a nearly 1 percent drop of the benchmark Hang Seng Index.
"The mainland's demand for coal as a whole will remain strong in 2007 we believe coal prices will remain high and there is still room for it to grow further," said China Coal Energy's Chairman Jing Tianliang.
Jing had told reporters earlier that of 65 percent of sale's proceeds would be invested in the construction of new opencast mines and deep mines.
Operating nine deep mines and three opencast mines in East, North and Northwest China, China Coal Energy has total coal reserves of 9.5 billion tons.
Coal accounts for more than 70 percent of the Chinese mainland's total energy consumption, and domestic output continues to increase rapidly as energy demand soars.
Demand for fuel may surge 8.5 percent to 2.51 billion tons by next year, according to the National Development and Reform Commission.
(China Daily December 14, 2006)