IPO prices of sci-tech innovation board firms released
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.”