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September 16, 2009

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Travel agency set to price IPO

China's top travel agency will launch an initial public offering in Shanghai this week to raise about 1.7 billion yuan (US$249 million) to expand its business and replenish working capital.

China International Travel Service Corp, which will consult with investors today about pricing the offer, plans to issue as many as 220 million yuan-denominated Class A shares, or 25 percent of its expanded capital after the IPO, according to a prospectus filed with the Shanghai Stock Exchange yesterday.

The company will use the proceeds from the share sale to fund business expansion, including 656 million yuan to set up more offices at home and abroad, and 271 million yuan to open more duty-free shops.

"The projects will help China International Travel grab more clients and expand into more tourism-related businesses," said Shen Zhouxiang, an analyst at China Securities Research.

"We estimate that the company's net income will reach 317 million yuan, rising 43.4 percent from a year earlier, or 0.36 yuan per share."

The company made 221 million yuan profit in 2008.


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