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Dalian Port's US$277 mln IPO in huge demand

Written by: Staff
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HONG KONG, April 17 (Reuters) - Dalian Port (PDA) Co. Ltd.HK>, operating China's third-largest oil port, has seen its US7 billion worth initial public offering over three times covered before opening for Hong Kong's retail investors on Tuesday, sources close to the deal said on Monday.

The state-run company has earmarked 33.6 percent of the IPO shares for four strategic investors, meaning a mere 16.4 percent of the shares on offer will be allocated to institutional investors, assuming the retail tranche expands to 50 percent of the offering from 10 percent due to massive oversubscription.

''Institutional orders have been limited to US million each since last Wednesday. They will be lucky to get one-tenth of their orders,'' said one source.

Shipping lines of N.Y.K. of Japan and China Shipping Terminal Development will buy 4.1 percent and 4 percent in Dalian Port's enlarged share capital, respectively. While Singapore's PSA International, which manages six container berths in Dalian, and global port giant Hutchison Whampoa had each agreed to buy 1 percent of the firm, the second pure port player to be listed in Hong Kong after Xiamen International Port Shares in Xiamen Port have surged about 40 percent since their listing in December.

Bookbuilding of the deal will close on Friday, while a trading debut has been set for April 28.

Dalian Port is offering 840 million shares, or 30 percent of its enlarged share capital, at HK HONG KONG, April 17 (Reuters) - Dalian Port (PDA) Co. Ltd.HK>, operating China's third-largest oil port, has seen its US$277 billion worth initial public offering over three times covered before opening for Hong Kong's retail investors on Tuesday, sources close to the deal said on Monday.

The state-run company has earmarked 33.6 percent of the IPO shares for four strategic investors, meaning a mere 16.4 percent of the shares on offer will be allocated to institutional investors, assuming the retail tranche expands to 50 percent of the offering from 10 percent due to massive oversubscription.

''Institutional orders have been limited to US$10 million each since last Wednesday. They will be lucky to get one-tenth of their orders,'' said one source.

Shipping lines of N.Y.K. of Japan and China Shipping Terminal Development will buy 4.1 percent and 4 percent in Dalian Port's enlarged share capital, respectively. While Singapore's PSA International, which manages six container berths in Dalian, and global port giant Hutchison Whampoa had each agreed to buy 1 percent of the firm, the second pure port player to be listed in Hong Kong after Xiamen International Port Shares in Xiamen Port have surged about 40 percent since their listing in December.

Bookbuilding of the deal will close on Friday, while a trading debut has been set for April 28.

Dalian Port is offering 840 million shares, or 30 percent of its enlarged share capital, at HK$2.175 to HK$2.575.

The issue price values Dalian Port at 15.1 to 17.9 times its 2005 earnings, a discount to peers such as China Merchants, Xiamen Port and COSCO Pacific, which trade at about 18 to 22 times historical earnings.

''Given the huge demand, I expect the deal to be priced at the top end,'' one Hong Kong-based fund manager said.

Sun Hong, chairman of the firm, said the price range was reasonable.

''To us, it's not only one offering. We hope the IPO will lay a good foundation for our future funding needs,'' the 43-year-old Sun told reporters via a video link in New York.

The northeastern-based firm's net dept-to-equity ratio stood high at 158 percent at the end of last year. Sun expects that to lower to about 90 percent, the industrial norm, after the listing.

Dalian Port plans to use proceeds to repay bank loans and to build 12 crude oil storage tanks and four new container berths.

Although Dalian lags Ningbo and Qingdao in oil throughput, it is favorably positioned at the country's northeastern refinery base.

Dalian Port handled 32 million tonnes of oil and liquefied chemicals, and the equivalent of 2.6 million 20-foot containers in 2005. By 2008, its capacity of oil and chemicals will increase to 58.1 million tonnes and that of containers to 4.7 million TEU.

REUTERS CS DS1440 .175 to HK HONG KONG, April 17 (Reuters) - Dalian Port (PDA) Co. Ltd.HK>, operating China's third-largest oil port, has seen its US$277 billion worth initial public offering over three times covered before opening for Hong Kong's retail investors on Tuesday, sources close to the deal said on Monday.

The state-run company has earmarked 33.6 percent of the IPO shares for four strategic investors, meaning a mere 16.4 percent of the shares on offer will be allocated to institutional investors, assuming the retail tranche expands to 50 percent of the offering from 10 percent due to massive oversubscription.

''Institutional orders have been limited to US$10 million each since last Wednesday. They will be lucky to get one-tenth of their orders,'' said one source.

Shipping lines of N.Y.K. of Japan and China Shipping Terminal Development will buy 4.1 percent and 4 percent in Dalian Port's enlarged share capital, respectively. While Singapore's PSA International, which manages six container berths in Dalian, and global port giant Hutchison Whampoa had each agreed to buy 1 percent of the firm, the second pure port player to be listed in Hong Kong after Xiamen International Port Shares in Xiamen Port have surged about 40 percent since their listing in December.

Bookbuilding of the deal will close on Friday, while a trading debut has been set for April 28.

Dalian Port is offering 840 million shares, or 30 percent of its enlarged share capital, at HK$2.175 to HK$2.575.

The issue price values Dalian Port at 15.1 to 17.9 times its 2005 earnings, a discount to peers such as China Merchants, Xiamen Port and COSCO Pacific, which trade at about 18 to 22 times historical earnings.

''Given the huge demand, I expect the deal to be priced at the top end,'' one Hong Kong-based fund manager said.

Sun Hong, chairman of the firm, said the price range was reasonable.

''To us, it's not only one offering. We hope the IPO will lay a good foundation for our future funding needs,'' the 43-year-old Sun told reporters via a video link in New York.

The northeastern-based firm's net dept-to-equity ratio stood high at 158 percent at the end of last year. Sun expects that to lower to about 90 percent, the industrial norm, after the listing.

Dalian Port plans to use proceeds to repay bank loans and to build 12 crude oil storage tanks and four new container berths.

Although Dalian lags Ningbo and Qingdao in oil throughput, it is favorably positioned at the country's northeastern refinery base.

Dalian Port handled 32 million tonnes of oil and liquefied chemicals, and the equivalent of 2.6 million 20-foot containers in 2005. By 2008, its capacity of oil and chemicals will increase to 58.1 million tonnes and that of containers to 4.7 million TEU.

REUTERS CS DS1440 .575.

The issue price values Dalian Port at 15.1 to 17.9 times its 2005 earnings, a discount to peers such as China Merchants, Xiamen Port and COSCO Pacific, which trade at about 18 to 22 times historical earnings.

''Given the huge demand, I expect the deal to be priced at the top end,'' one Hong Kong-based fund manager said.

Sun Hong, chairman of the firm, said the price range was reasonable.

''To us, it's not only one offering. We hope the IPO will lay a good foundation for our future funding needs,'' the 43-year-old Sun told reporters via a video link in New York.

The northeastern-based firm's net dept-to-equity ratio stood high at 158 percent at the end of last year. Sun expects that to lower to about 90 percent, the industrial norm, after the listing.

Dalian Port plans to use proceeds to repay bank loans and to build 12 crude oil storage tanks and four new container berths.

Although Dalian lags Ningbo and Qingdao in oil throughput, it is favorably positioned at the country's northeastern refinery base.

Dalian Port handled 32 million tonnes of oil and liquefied chemicals, and the equivalent of 2.6 million 20-foot containers in 2005. By 2008, its capacity of oil and chemicals will increase to 58.1 million tonnes and that of containers to 4.7 million TEU.

REUTERS CS DS1440

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