China building firm surges on US$231m debut
Shares in China National Building Material Co. (CNBM) surged 18.2 per cent in their US$231m Hong Kong trading debut on Thursday, as investors clamoured to profit from China’s booming economy. Investors are also betting that China’s cement sector is bottoming out as consolidation leads to a re-balancing of supply and demand.
Shares in the state-owned firm, which has investments in cement and building materials such as gypsum board and glass fibre through five companies, outperformed the benchmark Hang Seng Index to trade at HK$3.25, versus their issue price of HK$2.75 a share. The IPO values CNBM at 13 times 2006 earnings, compared with Anhui Conch Cement Co. Ltd.’s 22 times price-earnings ratio, and Xinyi Glass Holdings Ltd.’s 9.5 times.
The firm plans to expand cement production capacity by 45 per cent to 15.8Mt by 2007, up from 10.9Mt as of September 2005. CNBM sold 654.214 million shares, or 33 per cent of its enlarged share capital. Published under Cement News
