Shares of China Coal Energy Co. rose about 13 percent in their Hong Kong debut on Tuesday, underperforming some recent IPOs as investors cooled towards the resources sector.
Shares of state-backed China Coal, the industry No. 2, traded at HK$4.56, compared with an IPO price of HK$4.05 after it raised US$1.69 billion from a deal priced at the top of a range.
The early performance failed to match that of a trio of deals on Friday of last week, each of which rose more than 29 percent in their debuts, with shares of hotel operator Shanghai Jin Jiang International Hotels jumping 73 percent.
“The industry is not as attractive as the IPOs from sectors like telecoms,” said Ben Kwong, chief operating officer at KGI Asia, who had expected the stock to rise between 10 to 20 percent. “The performance is negatively affected by the market’s performance as a whole.”
MSCI’s energy sub-index of Asian stocks outside Japan fell 2.18 percent on Tuesday amid uncertainty about the outlook for commodity prices.
Hong Kong’s benchmark Hang Seng Index was off 1.24 percent on Tuesday, while the index tracking mainland Chinese companies listed in Hong Kong was down 1.83 percent.
Hong Kong’s stock market has had a record US$39.6 billion in new listings this year and Sunlight REIT, which is being sold by Hong Kong’s Henderson Land , will hit the market on Thursday with its US$350 million IPO, the year’s last big deal.
A Macau casino joint venture run by the sons of Australian media magnate Kerry Packer and casino tycoon Stanley Ho raised more than US$1.14 billion in a Nasdaq listing when it priced its new shares above an indicative range early Tuesday morning.
China Coal’s rise values its shares at 16.4 times 2006 earnings, compared with top China coal producer Shenhua Energy Corp.’s 17.4 times forecast earnings and Yanzhou Coal Mining Co.’s 11.2 times 2006 profits.
China accounts for 37 percent of the world’s coal consumption, making it the world’s biggest user.
The country is fighting to keep up with demand driven by its 10 percent economic growth, as coal made up 70 percent of the mainland’s energy use in 2005.
China ranks third in proven coal reserves, coming behind the United States and Russia, and China Coal’s chairman said earlier this month that prices should remain high on strong demand.
China International Capital Corp., Citigroup and Morgan Stanley handled China Coal’s deal.