IPO prices of sci-tech in­no­va­tion board firms re­leased

Global Times US Edition - - BIZUPDATE -

The IPO prices of the first 25 com­pa­nies to de­but on China’s sci­ence and tech­nol­ogy in­no­va­tion board were an­nounced on Thurs­day, with the high­est price to earn­ings (PE) ra­tio stand­ing at 170, and the to­tal value ex­ceeds the fore­cast prices by 5.9 bil­lion yuan ($859 mil­lion), thep­a­per.com re­ported on Thurs­day.

Ac­cord­ing to the re­port, among the 25 com­pa­nies, China Rail­way Sig­nal & Com­mu­ni­ca­tion Corp has the low­est stock price at 5.85 yuan per share, while Guangzhou Fang­bang Elec­tron­ics Co is the most ex­pen­sive one at 53.88 yuan.

Af­ter de­duc­tion of non-re­cur­ring gains and losses, the av­er­age PE ra­tio of these com­pa­nies reached 51.72, with Ad­vanced Mi­cro-fab­ri­ca­tion Equip­ment the high­est at 148.79. Not al­low­ing for de­duc­tions, the com­pany’s PE ra­tio would have been 170.79.

Al­though the av­er­age PE ra­tio might seem high, the prices are un­likely to fall be­low the IPO lev­els af­ter of­fi­cial trad­ing kicks off, Xu Hong­cai, deputy direc­tor of the Eco­nomic Pol­icy Com­mis­sion at the China As­so­ci­a­tion of Pol­icy Sci­ence, told the Global Times on Thurs­day.

“The ini­tial prices of the shares are de­ter­mined af­ter con­sid­er­a­tion of mar­ket ex­pec­ta­tions and the fu­ture de­vel­op­ment of the in­dus­try,” Xu said. “For the highly an­tic­i­pated sci­ence and tech­nol­ogy in­no­va­tion board, I don’t think a PE ra­tio around 51 is too high.”

A main rea­son be­hind the high IPO prices is strong de­mand in the mar­ket for in­vest­ment op­por­tu­ni­ties in tech­nol­ogy and in­no­va­tion com­pa­nies, Xu said.

“I think 25 com­pa­nies are far from enough to sat­isfy the mar­ket ap­petite for tech­nol­ogy com­pa­nies,” Xu said.

“The cur­rent prices just re­flect that there are high hopes for the sec­tor, as well as for the struc­tural up­grad­ing in the Chi­nese econ­omy in gen­eral.”

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