Xiamen opens port to stock investors
（ 2005-12-8 8:44:00 China Daily ）
HONG KONG: Xiamen International Port Co, the major operator of the mainland's seventh largest port, is launching an initial public offering (IPO) in Hong Kong.
The IPO is expected to draw considerable demand from local investors thanks to the robust trade between the mainland and Taiwan, analysts said.
The company is expected to raise as much as US$156 million by offering 858 million shares, or 33.2 per cent of its enlarged share capital, at a proposed price range of HK$1.18 to HK$1.42 a share.
Hong Kong-based analysts said the operator of the nearest mainland port to Taiwan had good potential.
"I believe Xianmen International Port will draw a considerably large demand from Hong Kong investors for its unique selling point," said a Hong Kong-based analyst, who asked not to reveal his name.
"Given its strategic location and significant handling capacity, as well as the mainland's export surge, the port will provide shareholders with a favourable yield in the future," he predicted.
Some analysts said possible direct trade between the mainland and Taiwan in the future will give a big boost to the firm.
"It is only a matter of time before Taiwan will trade directly with the mainland, and Xiamen International Port will then see exponential growth," Clive Zhang, a fund manager at Partners Capital Asset Management, was quoted as saying.
The two-way trade volume between the mainland and Taiwan surged by 14 per cent to US$64.9 billion from January to September.
Commenting on market doubt about the company's development potential as it only operates in Xiamen, the anonymous analyst said focusing on one place would not affect the company's strength.
He said: "The single place operation will help it simplify and strengthen its management.
"It is good if you are the number one in a lucrative market and there is no point to heading into other places if you are not prepared."
According to the Ministry of Communication, the mainland's top five ports have seen the cargo they handle rise by between 19 per cent and 29 per cent in the first 10 months of this year. The leading ports were Ningbo, Tianjin and Shanghai.
Xiamen's throughput rose by 15.8 per cent during the same period.
Xiamen International Port controls 80 per cent of Xiamen's port trade through its 55 per cent stake in Xiamen Port Development, 85 per cent of Xiamen Haitian Co and 70 per cent in Xiamen Haicang Port Co.
The firm has an option to buy a 50 per cent stake in the three-berth 3 billion yuan (US$370 million) Songyu terminal project, a 50-50 joint venture with Maersk.
The completion of Songyu terminal will boost Xiamen's container port capacity by 41 per cent by 2007.
The underwriter for the offering, BNP Paribas Peregrine, hopes Xianmen International Port's earnings will rise by 16 per cent to 245 million yuan (US$31 million) this year and jump other 15 per cent to 282 million yuan (US$35 million) in 2006.