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August 1, 2009

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Firm to buy parent assets with share issue

SHANGHAI Construction Co plans to issue 358 million shares to its parent at 14.52 yuan (US$2.12) each to buy core assets worth 5.2 billion yuan to boost its competitiveness.

The company will acquire its parent's stakes in 12 subsidiaries and properties in nine locations, it said in a statement to the Shanghai Stock Exchange yesterday.

Its parent, Shanghai Construction Group, will own 70.9 percent of the listed arm after the stake transfer, from 56.41 percent previously.

"The deal will help enhance the listed company's profitability," said Li Pan, an analyst at BOC International.

"We raised the targeted share price for the company to 20.50 yuan apiece from 12.34 yuan and suggest investors buy its shares," Li said.

The firm rose 4.76 percent to 17.60 yuan yesterday after being suspended from trading for one month. The key Shanghai Composite Index gained 2.72 percent to 3,412.06.

Operating revenue of the group, the country's biggest construction project contractor, rose 31.5 percent to 44.23 billion yuan in the first six months of this year.


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