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CSCEC may be first to float shares

By Hu Yuanyuan (China Daily)
Updated: 2009-06-11 09:28

China State Construction Engineering Corp (CSCEC), the country's biggest home-builder, would probably be among the first batch of companies to issue new shares to the public, analysts said.

The securities regulator last June gave it the nod to float shares at the Shanghai bourse, but the plan was suspended due to the sluggish stock market situation.

"CSCEC will probably be among the first batch of new IPOs. But, as it will still take time to complete the formalities at the bourse, the first float is likely to kick off in late June," said an industry insider who preferred not to be named.

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The company is expected to issue 12 billion A shares and raise about 40 billion yuan, making it the fifth-largest IPO in the mainland ever, according to its pre-release prospectus.

The capital raised would be used to fund big construction projects, infrastructure investment, commercial housing development and machinery equipment purchases, it said.

However, since the market situation had changed a lot since June 2008, analysts said the company was unlikely to raise such a huge sum of money now.

Bao She, an analyst with Guoyuan Securities, said the amount of issued shares might shrink to below 10 billion and the money raised could hover around 35 billion yuan.

"As the overseas market, which contributed over 60 percent to CSCEC's revenue, has been hit by the global financial crisis, the 2008 financial performance of the company should be worse than that of the previous year," Bao said.

CSCEC earned a net profit of 4.92 billion yuan in 2007, up 103.9 percent year-on-year. China International Capital Corporation will be the lead underwriter for the issue, the prospectus stated.

CSCEC made its name by building the National Aquatics Center, the China Central Television headquarters and the Shanghai Financial World Center, the highest skyscraper in the mainland.