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First-day rally greets new listings on A-share market
By Lydia Chen |
August 10, 2011, Wednesday
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Online Edition
Online Edition
SHARES of three new listings on the A-share market staged a rare first-day rally today, each enjoying over 40 percent surge on their debuts, as market sentiment shifted after massive sell-off in the past two days.
The rally in share prices of Founder Securities, Wuhu Yaxia Automobile Co and Sainty Marine Co was a sharp contrast from the performances of their predecessors in the first half of this year. One in three of them saw their first-day closing prices below initial public offering prices.
Founder, the Chinese partner of Credit Suisse, saw its shares traded at as high as 6.04 yuan (94 US cents) after opening at 5.51 yuan and closed at 5.6 yuan, up 43.59 percent from its IPO price of 3.90 yuan.
"This was higher than expected," said Liang Jing, an analyst with Guotai Jun'an Securities. "The closing price is obviously not based on the company's earning capability but a result of the market rebound."
He said a reasonable price for Founder would be between 3.8 to 4.3 yuan.
The Shanghai-listed Founder, which competes with big rivals such as Citic Securities and Haitong Securities, raised 5.85 billion yuan through the third-biggest IPO on the mainland market so far this year.
Founder's net profit reached 1.27 billion yuan in 2010, compared with 1.39 billion yuan in 2009.
Galaxy Securities said it expected the net profit of Founder to be around 895 million yuan, which means the price-to-earnings ratio for Founder this year is between 22 to 26 times, Galaxy said.
The rally in share prices of Founder Securities, Wuhu Yaxia Automobile Co and Sainty Marine Co was a sharp contrast from the performances of their predecessors in the first half of this year. One in three of them saw their first-day closing prices below initial public offering prices.
Founder, the Chinese partner of Credit Suisse, saw its shares traded at as high as 6.04 yuan (94 US cents) after opening at 5.51 yuan and closed at 5.6 yuan, up 43.59 percent from its IPO price of 3.90 yuan.
"This was higher than expected," said Liang Jing, an analyst with Guotai Jun'an Securities. "The closing price is obviously not based on the company's earning capability but a result of the market rebound."
He said a reasonable price for Founder would be between 3.8 to 4.3 yuan.
The Shanghai-listed Founder, which competes with big rivals such as Citic Securities and Haitong Securities, raised 5.85 billion yuan through the third-biggest IPO on the mainland market so far this year.
Founder's net profit reached 1.27 billion yuan in 2010, compared with 1.39 billion yuan in 2009.
Galaxy Securities said it expected the net profit of Founder to be around 895 million yuan, which means the price-to-earnings ratio for Founder this year is between 22 to 26 times, Galaxy said.
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