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Tag Archives: China Communications Construction

HK Woes Point to Shanghai Sell-Off Next Week 港股跌宕起伏沪深後市堪忧

By newsdoug on October 7, 2011

Shanghai set for choppy waters when trading resumes China’s struggling stock markets are taking a much-needed weeklong break for the National Day holiday, but weak sentiment has continued unabated in Hong Kong, where the stock market tanked earlier in the week and shares of premier brokerage Citic Securities (HKEx: 6030) stumbled badly in their first trading debut outside China. The Hong Kong board started off the week in free-fall, shedding 7.6 percent on Monday and Tuesday before staging a rally on Thursday. But it was still down 2.4 percent at the start of the Friday trading day, and the volatility clearly reflects investor angst over what will happen when trading resumes in Shanghai and Shenzhen next Monday, with more sell-offs likely. In the midst of the chaos, shares of Citic Securities (Shanghai: 600030), the first in a string of high-profile listings of major state-connected firms aimed at propping up the markets, stumbled out of the gate, losing as much as 10.5 percent from their IPO price on their first trading day before finishing the day unchanged, even as the broader market rallied 5.7 percent. (English article) The weak debut, which came after Citic Securities already scaled back the offering and priced its shares at the low end of their range, bodes poorly for a number of other major state-run firms lining up to go public, including Sany Heavy Industries (Shanghai: 600031), which is also planning a listing in Hong Kong, and China Communications Construction, which is planning a Shanghai listing. (previous post). Meantime, the weakness has led two premier Hong Kong-listed China Internet names, Tencent (HKEx: 700) and Alibaba.com (HKEx: 1668), to do the once unthinkable and actually buy back their shares (Tencent article; Alibaba article). They join a list of peers that has so far included many mid-sized US-listed China tech firms like Ctrip (Nasdaq: CTRP) and Renren (NYSE: RENN) but has yet to see the likes of top names like Baidu (Nasdaq: BIDU) and Sina (Nasdaq: SINA) resort to such buy-backs. But if the current sell-off continues, we might even see these big names join the buy-back frenzy, showing just how low sentiment has sunk towards China plays, especially Internet stocks.

Bottom line: China’s stock markets will fall when trading resumes next week, extending sell-offs in Hong Kong and New York while Chinese markets were closed for the October 1 holiday.

Beijing IPO Campaign to Boost Markets Falls Flat 大宗IPO提振中国股市或成泡影

By newsdoug on September 29, 2011

Investor angst throws water on Beijing's IPO party Beijing is quickly discovering that it can throw a party by making mega-IPOs for some of its best companies in a bid to revive its moribund stock markets, but there’s no guarantee that anyone will come to join the fun. That appears to be the lesson as CITIC Securities (Shanghai: 600030) has been forced to pare back its plans for a Hong Kong IPO by more than 10 percent due to lackluster demand. (English article) The company, which offers one of the best windows for foreign investors into China’s promising financial sector, is now aiming to raise just $1.7 billion, compared with a previous target of $2 billion, after pricing the deal at the low end of its range. The reduced offering and final pricing, which give the company a modest price-to-earnings ratio of just 9 times 2011 earnings, are a bit surprising after reports said earlier this week that the deal was 4 times covered. Clearly either the company’s bankers were exaggerating to generate more enthusiasm, or investors got cold feet due to growing uncertainty about China’s financial sector, or most like a combination of the 2 was behind this disappointing result. CITIC Securities was to be the first of a steady stream of Chinese blue-chip firms to make new mega-listings in Hong Kong and Shanghai, in what I suspect was a carefully orchestrated effort by Beijing to revive those two markets — especially a Shanghai market now trading at its lowest levels in over a year. Other major firms that announced mega listing plans included Sany Heavy Industries (Shanghai: 600031), which was aiming to raise $3.3 billion in a Hong Kong listing; and Sinohydra Group, operator of the 3 Gorges Dam, and China Communications Construction, which were aiming to raise $2.6 billion and $3.1 billion, respectively, through listings in Shanghai. (previous post) Some of the companies were already talking about reducing or canceling their offerings due to weak market demand, and this disappointing showing for CITIC Securities will only cause more hesitation. If I had some extra money to spend, I would invest in some of these upcoming IPOs, as they will undoubtedly offer nice bargains for some of China’s top corporate names. That will be bad news for Beijing, which was hoping to get better returns for some if its top-notch players.

Bottom line: Investor angst will undermine Beijing’s plans to revive markets with IPOs for some of China’s top companies, providing bargain buying opportunities for bolder investors.

中国当局很快就发现：虽然能通过一些优质企业大规模招股为股市注入活力，但却不能保证有多少人愿意凑这场热闹。中信证券(600030.SS)在香港IPO，由于需求不旺而降低了筹资额。中信证券是外国投资者押注中国金融业的一个良机，原计划透过在港IPO筹资20亿美元，但最终以招股价指导区间低端定价，筹资额减为17亿美元。这有点令人意外，因本周稍早报导称，中信证券H股获得了四倍认购。这麽看来，要麽是承销商为吸引投资热情而夸大其词，要麽就是投资者面对中国金融业的不确定性望而却步，更大的可能是二者兼而有之。我猜测中信证券香港IPO可能是中国政府精心策划的，希望能藉此提振沪港股市，尤其是跌至逾一年低位的沪市。其他宣布了大宗上市计划的还有三一重工(600031.SS)、中国水电和中国交通建设等。三一重工计划在香港上市融资33亿美元；中国水电是三峡大坝建设方，计划在沪市融资26亿美元；中国交通建设则计划在沪市融资31亿美元。由于市场需求低迷，有些公司已经在考虑削减或取消上市计划，而此次中信证券的表现，肯定会令它们更加迟疑。不过，如果我手头有闲钱，我就会买这些即将上市的新股，因为肯定能够以较低的价格，买到这些中国顶级企业的股份。不过这样的局面，恐怕会令中国当局感到失望。

一句话：投资者不安情绪，不利于中国当局藉由大宗IPO提振股市的计划，不过对胆大的投资者来说，倒是不错的买入时机。

China Offers Up Premier IPOs to Revive Markets 大企业沪港上市政府借机重燃沪港生机

By newsdoug on September 26, 2011

China floods market with premier offerings Despite one of the worst IPO markets in the last 2 years, we’re seeing a sudden spurt of major Chinese state-run firms suddenly rush to make new listings in Shanghai and Hong Kong, in what looks like a behind-the-scenes campaign by Beijing to try and halt a recent skid in its stock markets. In the latest development of this new mega-IPO parade, Sinohydra Group, the nation’s biggest hydropower company and builder of the 3 Gorges Dam, is planning to raise $2.6 billion in a Shanghai IPO (English article); and China Communications Construction, a leading construction firm, is planning to raise $3.1 billion, also in a Shanghai offering. (English article) News of these two mega-offerings follows similar announcements last week by Shanghai-listed CITIC Securities (Shanghai: 600030), China’s largest brokerage, and Sany Heavy Industry (Shanghai: 600031), a top maker of industrial equipment, which said they planned to make Hong Kong IPOs worth $2 billion and $3.3 billion, respectively. Some quick math will show that these 4 offerings combined would suddenly flood Shanghai and Hong Kong with more than $10 billion in new shares, drawing away investment dollars from other firms in an already weak market. But at the same time, the offering of 4 such premier names all around the same time looks very suspicious to me, as all should be very attractive to investors. That leads me to suspect that this exercise and its timing is being quietly orchestrated by central government and stock market officials in a carefully choreographed plan to try and breathe some life back into these two sputtering markets, especially a Shanghai market that is trading near its 52-week low and has lost nearly a quarter of its value from its peak earlier this year. I have to applaud Beijing for its effort to try and bring back some excitement to the market, and also note that this kind of campaign could only happen in China, where many top firms still take their cues from Beijing. I would look for these attractive offerings to give the markets a short boost, but the downward trend will quickly come back unless global markets start to show some new life soon.

Bottom line: Beijing’s new campaign to bring some of its premier companies to market with new IPOs could provide a short lift for the sputtering Hong Kong and Shanghai markets.

尽管IPO市场处两年来最遭时期，但近来中国国有大型企业突然爆发，积极准备沪、港上市，看起来似乎是政府想要幕後使力，竭力想阻止股市下滑。比如，近来中国头号水电企业–中国水利水电拟A股IPO，计划募资26亿美元；中国交通建设亦计划通过上海上市，募资31亿美元。另外，中国头号券商–中信证券<600030.SS>上周宣布宣布H股上市，计划募资20亿美元；中国工程机械制造公司–三一重工拟H股IPO，募资33亿美元。综合四起IPO，你会发现沪、港两市会突然涌出超100亿美元的新股，在市场本已非常疲软的情况下，吸引走其他企业的投资。但同时，四家超大企业约同时进行IPO看起来令人生疑，四起IPO对投资者应该都有很大吸引力。这让我怀疑，所有这一切是否都是政府与股市官员刻意安排，为两个持续疲软的市场注入一些生机与活力，尤其是沪综指交投点位接近52周低位，较今年稍早高点缩水近四分之一。政府竭力为市场增添生机，这点我不得不拍手称赞，但要指出的一点是，这种事情只会在中国发生，因很多大国企仍听从政府的指挥。这些企业上市短期会提振股市，但是，全球市场如不重现生机，那麽沪港两市很快会回归颓势。

一句话：中国政府推动其金牌大企业上市，可能为疲软不堪的沪港股市提供短期支撑。

News Digest: September 24-26, 2011

By newsdoug on September 24, 2011

The following press releases and media reports about Chinese companies were carried on September 24-26. To view a full article or story, click on the link next to the headline.

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◙ China Communications Construction eyes $3.1 billion Shanghai IPO (English article)

◙ Lenovo (HKEx: 992) Lowers Price on A1 Tablet PC to 1,000 Yuan, May Start Price War (Chinese article)

◙ Dangdang (NYSE: DANG) Announces Fulfillment Developments, New Head of Technology (PRNewswire)

◙ ZTE (HKEx: 763; Shenzhen: 000063) Officially Launches Skate 4.3-Inch Smartphone Globally (Businesswire)

◙ Silvercorp (NYSE: SVM) Sues Chinastockwatch.com Alleging Attempt to Drive Down Shares (English article)

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