The second group of companies to be listed on the ChiNext stock market in Shenzhen will likely do better than expected, according to Shanghai Securities News.
The price to earnings (P/E) ratio - a key indicator of demand for a particular stock for eight companies approved to sell their stocks on the NASDQ-style growth enterprise board will be much higher than the first group of companies listed. Two of the eight companies have a P/E ratio of over 100, the report said.
The eight companies will now likely raise a total of 4.93 billion yuan ($722 million), and have an average P/E ratio of 83. The initial price of the companies' stock will also be higher than expected. Among the companies to be listed:
- Hexin Flush Information Network Company, which will publicly issue 16.80 million shares at 52.80 yuan apiece, with an upper limit of 10,000 shares per investor;
- Jiangsu Huasheng Tianlong Photoelectric Company, which will offer 50 million public shares at 18.18 yuan each, with an upper limit of 30,000 shares per investor;
- Hunan Zhongke Electric Company, which will offer 15.5 million public shares at 36 yuan each with an upper limit of 12,000 shares per investor;
- Wuxi Boton Belt Company, which will offer 12.5 million public shares at 38 yuan each, with an upper limit of 10,000 shares per investor;
- Beijing Cisri-Gaona Materials & Technology Company, which will offer 30 million public shares at 19.53 yuan each, with an upper limit of 24,000 shares per investor;
- Jinlong Machinery and Electronics Company, which will offer 35.7 million public shares at 19 yuan each, with an upper limit of 28,000 shares per investor;
- Guangzhou Improve Medical Instruments Company, which will offer 18.6 million public shares at 25 yuan each, with an upper limit 14,000 shares per investor;
- Beijing SuperMap Software Company, which will offer 19 million public shares at 19.6 yuan each, with an upper limit 15,000 shares per investor.
Jinlong Machinery and Electronics Company has the highest P/E ratio of the new companies that will be listed, at 126.67. It will likely raise up to 678.3 million yuan in its initial public offering (IPO), 171 percent more than it had previously planned to. Guangzhou Improve Medical Instruments Company also has a P/E ratio of over 100, is now expected to raise over 320 percent more than it had planned to.
Jiangsu Huasheng Tianlong Photoelectric Company, has P/E ratio of 62.69, and is issuing the largest number of shares among this group of companies. It is expected to raise about 900 million yuan, also over 220 percent more than it had planned. Even the lowest P/E ratio, that of Hunan Zhongke Electric Company, at 59.02, is still higher than the average P/E ratio of the first group of GME companies.
The shares will be available for purchase on the ChiNext board on Dec 16.
The board began trading on Oct 30, 2009, and is focused on providing small and medium-sized enterprises with a way to grow and raise money. The board closed higher Tuesday as 26 of its 28 companies saw an increase in their shares.
