Home
News
In Focus
Business
Metro
Nation
World
Sports
Feature
Opinion
View more »Opinion Columns
Wan LixinOpinion deputy editor of Shanghai Daily
Restaurants get off to a quick start thanks to game-changing policies
High service charges on event ticket refunds call for further regulation
Sunday
- Subscribe
Related News
IPO duo suspended after rush
By Winny Wang |
July 11, 2009, Saturday
|
Print Edition
Print Edition
THE first two companies to go public on the Chinese mainland since last September rocketed on their trading debuts yesterday, triggering brief suspensions by the bourse.
Guilin Sanjin Pharmaceutical Co, China's largest herbal-lozenge maker, kicked off at 32.50 yuan (US$4.76) from its initial public offering price of 19.80 yuan. It rose 81.87 percent to close at 36.01 yuan on the Shenzhen Stock Exchange.
Zhejiang Wanma Cable Co opened at 22.50 yuan from the IPO price of 11.50 yuan, and jumped 125.48 percent to 25.93 yuan.
The rules stipulate that a company's shares will be suspended for 30 minutes on debut day if the price rises or falls by more than 20 percent after opening. Another 30-minute suspension will be enforced when a share price fluctuates by more than 50 percent in either direction.
The rules are to curb speculation and protect investors. Chinese buyers tend to favor IPOs as prices almost always surge on the first day of trading.
"As one of the two companies that launched IPOs after the 10-month suspension, Wanma must have been delighted with the response but the increase was higher than our expectations," said Shi Haisheng, an analyst at Zheshang Securities.
"A reasonable price-to-earnings ratio for Wanma should be between 23 and 28, but the ratio has exceeded 50 now, and we expect its share price to fluctuate sharply in the short term.
"I don't think the securities regulator's efforts in preventing excessive first-day price swings were effective."
The China Securities Regulatory Commission last month introduced a new IPO pricing system, under which an investor can apply to buy only up to 0.1 percent of all the shares available in an IPO.
It is part of commission efforts to curb speculation and narrow the difference between the IPO price and the trading price at a stock's debut after firms that went public last year gained an average 152 percent on debut.
"Sanjin's PE ratio reached 50 on debut, compared to the average PE ratio in the medicine industry of 26. We expect this stock to experience a slump soon," said Zhang Xiang, an analyst at Guodu Securities Co.
Guilin Sanjin Pharmaceutical Co, China's largest herbal-lozenge maker, kicked off at 32.50 yuan (US$4.76) from its initial public offering price of 19.80 yuan. It rose 81.87 percent to close at 36.01 yuan on the Shenzhen Stock Exchange.
Zhejiang Wanma Cable Co opened at 22.50 yuan from the IPO price of 11.50 yuan, and jumped 125.48 percent to 25.93 yuan.
The rules stipulate that a company's shares will be suspended for 30 minutes on debut day if the price rises or falls by more than 20 percent after opening. Another 30-minute suspension will be enforced when a share price fluctuates by more than 50 percent in either direction.
The rules are to curb speculation and protect investors. Chinese buyers tend to favor IPOs as prices almost always surge on the first day of trading.
"As one of the two companies that launched IPOs after the 10-month suspension, Wanma must have been delighted with the response but the increase was higher than our expectations," said Shi Haisheng, an analyst at Zheshang Securities.
"A reasonable price-to-earnings ratio for Wanma should be between 23 and 28, but the ratio has exceeded 50 now, and we expect its share price to fluctuate sharply in the short term.
"I don't think the securities regulator's efforts in preventing excessive first-day price swings were effective."
The China Securities Regulatory Commission last month introduced a new IPO pricing system, under which an investor can apply to buy only up to 0.1 percent of all the shares available in an IPO.
It is part of commission efforts to curb speculation and narrow the difference between the IPO price and the trading price at a stock's debut after firms that went public last year gained an average 152 percent on debut.
"Sanjin's PE ratio reached 50 on debut, compared to the average PE ratio in the medicine industry of 26. We expect this stock to experience a slump soon," said Zhang Xiang, an analyst at Guodu Securities Co.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
