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文章标题: China's Lingbao Gold IPO draws sparkling demand
发布时间: 2006/01/04
发布媒体: Reuters
文章作者: Clive Zhang

正文内容:

China's Lingbao Gold IPO Draws Sparkling Demand 
 
2006-01-04 19:10:56      Reuters 
 
HONG KONG - Chinese gold smelter and producer Lingbao Gold Co. Ltd. is drawing voracious investor demand for its US$110 million Hong Kong IPO, powered by buoyant global gold prices. 

Market sources said the institutional portion of the deal was more than 50 times covered, while local brokers expect the retail tranche to be 900 times subscribed.
The order book is set to close on Thursday, with a trading debut scheduled for Jan. 12.

"The deal is very hot. Many clients are borrowing money to subscribe for the shares," said Stephen Tse, an analyst at Phillip Securities.

The price of gold rose to three-week highs on Wednesday, with further gains expected to test last year's near-25-year peak at US$540 per ounce.

Shares in Hong Kong-listed mainland China gold producer Zijin Mining Group Co. Ltd. surged more than 10 percent to HK$4.00 each on Wednesday before closing at HK$3.825 for a gain of 6.25 percent.

"Lingbao's quality is not as good as Zijin, but its pricing is a lot cheaper," said Clive Zhang, chief investment officer at Partners Capital Asset Management.

Lingbao Gold is offering 258.8 million H-shares, or 35.17 percent of its enlarged share capital, at between HK$2.55 and HK$3.33 each.

That values Lingbao Gold at 13 to 17 times forecast 2005 earnings per share of HK$0.196, a discount of about 40 percent to Zijin, which trades at 27 times 2005 earnings. At the top of the indicated range, shares in Lingbao would be sold at 2.4 times prospective book value, a 56 percent discount to Zijing's 5.5 times price-to-book.

On average, global peers such as Newmont Mining , Newcrest Mining Ltd. and AngloGold Ashanti Ltd.trade at 35 times forecast 2006 earnings.

Some analysts expect Lingbao shares to jump to over HK$4.00 each after their debut on Jan. 12.

Lingbao's net profit will increase 26 percent to 150 million yuan in 2005, according to its listing document.

But with 80 percent its gross profit generated from gold smelting, Henan province-based Lingbao Gold is more of a smelter than a miner.

The company expects to be able to supply 50 percent of its smelting demand with its own gold by 2008 through stepped-up production at its mines.

However, a stronger yuan currency would hurt Lingbao's margins as the price of gold in China is linked to the international price, which is dominated in US dollars.

BOC International, the sponsor of the deal, estimates that each percentage point increase in the value of the yuan would reduce Lingbao's 2006 earnings by 2 percent.

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