Money

ABC's IPO share price undecided

By Wang Bo (China Daily)
Updated: 2010-06-07 08:56

ABC's three major state-run peers, Industrial and Commercial Bank of China, China Construction Bank and Bank of China, are currently traded at about 1.8 times their 2010 price-to-book multiples, which could give clues regarding ABC's share price, analysts said.

After several rounds of talks, several Middle Eastern sovereign wealth funds, including Kuwait Investment Authority and institutional investors from the United Arab Emirates, have expressed keen interest in becoming cornerstone investors for ABC's IPO.

Before that, China's national pension fund has invested $2.2 billion and is the only strategic investor that the bank roped in before its IPO.

As a major lender specialized in serving the country's 800 million farmers and agricultural sector, ABC received tax cuts for its rural lending unit covering 561 county-level branches in eight provinces in May, a move that analysts expect could boost the lender's profitability by some 5 billion yuan.

Related readings:  Regulator to review ABC's IPO application   ABC likely to issue 51.4m shares in IPO  Mideast sovereign funds eye AgBank IPO  ABC listing may be cleared in early June

The bank's chairman, Xiang Junbo, said in an earlier interview that the lender boasted huge potential for growth thanks to its extensive rural network, given that urbanization is going to be the country's main theme over the next 10 years.

Last year, ABC posted a net profit of 65 billion yuan, up 26.3 percent from a year earlier. The capital adequacy and bad-loan ratio stood at 10.07 percent and 2.91 percent respectively by the end of last year.