COSCO jumps 83% in Shanghai debut
(Reuters)Updated: 2007-06-26 17:25 Shares in China COSCO Holdings more than doubled as they listed in Shanghai on Tuesday, after the shipping giant's $2 billion domestic initial public offer (IPO) attracted a record 1.629 trillion yuan ($214 billion) in subscriptions.
The A shares in the world's fifth-biggest container ship operator opened at 15.52 yuan on the Shanghai Stock Exchange, up 83 percent from their IPO price and in line with market expectations.
The shares then climbed further in a hectic first hour of trade to as high as 17.15 yuan, slightly more than double the IPO price.
The shares of COSCO were traded at 16.38 yuan when the market closed in Shanghai at 3:00 pm.
The strong debut contrasted sharply with a weak overall Shanghai market, where the main index tumbled more than 3 percent in morning trade because of expectations for an interest rate hike and concern about heavy new supplies of shares.
"People are attracted by China COSCO's growth story," said Zheng Weigang, analyst at Shanghai Securities. "At 18 yuan it probably wouldn't look too expensive."
The firm, 51 percent owned by China Ocean Shipping (Group) Co., will use the IPO proceeds to buy a majority stake in sister company COSCO Logistics and pay for 12 new ships, consolidating its position as China's top ocean shipping firm.
Niu Yuming, shipping analyst at Haitong Securities, said the shares would jump to 25 yuan apiece by the end of this year if that purchase went ahead.
The price of 17.15 yuan left China COSCO's A shares at a 54 percent premium to the HK$11.40 last close of its Hong Kong-listed H shares. That compared to a 32 percent premium for its closest competitor, China Shipping Development.
China COSCO's $2 billion offer was the seventh-largest IPO on the mainland's Shanghai and Shenzhen stock exchanges. It sold 1.784 billion A shares, equivalent to 20 percent of its expanded share capital.
The company, which competes with global leaders such as Moeller-Maersk and
Evergreen, attracted the most subscriptions from retail and institutional investors of any IPO on China's
domestic stock market.
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