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September 2, 2009

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Regulator to review chemical giant's IPO

CHINA'S stock regulator said it will review the US$428 million initial share sale application by China National Chemical Engineering Co on Friday.

The company aims to issue up to 1.23 billion A shares, or 25 percent of an expanded capital, on the Shanghai Stock Exchange, according to a listing prospectus posted on the Website of the China Securities Regulatory Commission late on Monday.

The company, China's leading chemical and petrochemical engineering contractor, said it will use 2.92 billion yuan (US$428 million) of the proceeds to buy equipment and replenish working capital for major projects.

China resumed initial public offerings in June when the market boomed, ending a nearly 10-month suspension. China State Construction Engineering Corp, the nation's top housing contractor, which raised US$7.3 billion in a Shanghai IPO, rose 56.22 percent on its first trading day on July 29, a hefty rise but dwarfed in comparison with other smaller caps' debuts.

Analysts have said the CSRC appeared to be fast tracking listing approvals to cool the market. The flood of share sales, coupled with concerns over slower lending growth, had pushed the Shanghai Composite Index down 22 percent last month.

China National Chemical Engineering said it risks lower demand as customers cut spending in new petrochemical projects amid a slowing economy. Depressed oil prices have also reduced orders of coal-to-fuel and chemicals projects. Net profit for the company declined 10 percent to 634.4 million yuan last year while sales rose 34 percent to 22.8 billion yuan.

China Securities Co is managing the share sale.


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