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Sanjin hopes to score in share sale

GUILIN Sanjin Pharmaceutical Co plans to reap 910.8 million yuan (US$133.35 million) in the first initial public offering on Chinese mainland after a nine-month hiatus.

The drug maker will sell 46 million shares, 10.13 percent of its total shares, at an initial price of 19.80 yuan each, and the raised proceeds are expected to be 276.67 million yuan higher than the originally planned amount, according to a statement it filed to the Shenzhen Stock Exchange yesterday.

The IPO price, equating to a price-to-earnings ratio of 33 based on the company's earnings per share of 0.60 yuan last year, was higher than many analysts' expectations.

"A reasonable initial price should be 18.50 yuan, equating to a P/E ratio of 25," said Sinolink Securities Co, which expected the price to range between 22.20 yuan and 25.90 yuan on its debut next Monday.

Sanjin plans to use the funds to upgrade production lines for herbal medicines and build a storage and logistics center, as well as replenish cash flow, the statement said.

Sanjin on June 10 said it got final approval for an IPO, which made the company the first on the mainland to launch an IPO since the regulator halted domestic new share sales in September on worries that too much equity supply might lead the market to collapse.

The Shanghai Composite Index sank nearly 60 percent in the first nine months of last year, but it has gained more than a third since the start of the IPO suspension.


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