China's 1st stock listing in 14 months surges
January 18, 2014, 12:00 am TWN
SHANGHAI--The first stock market listing in China for more than a year leaped more than 40 percent on its debut Friday after authorities ended a freeze on initial public offerings.
Neway Valve (Suzhou) Co. soared 43.49 percent from its listing price to close at 25.34 yuan (US$4.19) on Friday, after touching an intra-day high of 25.42 yuan, while the broader market sank 0.93 percent.
The industrial valve maker was briefly suspended in morning trade on the Shanghai Stock Exchange after its shares surged by almost a third shortly after the market opened.
The exchange temporarily halts trading in a newly listed share if it rises or falls more than 10 percent from its opening price.
Analysts said Neway Valve's strong performance signaled a good start for dozens of companies that have initial public offering (IPO) plans.
“Everyone is looking at Neway to gauge the market's enthusiasm for new listings,” Yan Li, an analyst with Guosen Securities, told Dow Jones Newswires.
Neway Valve is among the first batch of five companies announcing in late December that China's market regulator had given the green light for share offers, following a suspension of approvals in November 2012.
The securities regulator froze IPOs while it considered new guidelines to reform the listing process, and in an effort to help avert a slide in stock prices.
The China Securities Regulatory Commission (CSRC) has traditionally decided which firms can launch IPOs and when they go to market, instead of underwriters and the companies themselves, though authorities have pledged change.
So far more than 50 of the roughly 760 firms lining up for IPOs have won approval to float on China's two domestic bourses in Shanghai and Shenzhen, exchange filings show.
But while there is impressive demand for new listings, the mainland's markets have suffered heavy losses in recent weeks as investors worry about a glut of issues that could divert cash from other shares.
Neway Valve said in an earlier statement that it raised 1.46 billion yuan from its IPO, nearly 75 percent more that it had originally sought, for investment in production facilities.
Based in the eastern city of Suzhou, Neway Valve is China's biggest industrial valve manufacturer and exporter, its website says.
In the first three quarters of last year, the company's revenue rose 12.5 percent year-on-year to 1.8 billion yuan, the company said. Net profit for the January-September period last year reached 353.7 million yuan, up 67 percent from a year earlier.