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New kids add fizz to ChiNext

By Yu Tianyu (China Daily)
Updated: 2010-01-08 08:06

A model bus is displayed at a toy exhibition held in Nanjing, Jiangsu province. Auto toy producer Xinghui plans to raise funds on China's start-up board. [China Daily]

Eight firms set to raise 5.8b yuan through initial public offerings

Xinghui Auto Model Co and seven other Chinese companies said they are expected to raise a total of 5.8 billion yuan on the country's NASDAQ-style board, ChiNext, as they began inviting subscriptions yesterday.

Xinghui, a Guangdong-based manufacturer of toy cars, and the seven other firms had earlier targeted raising a combined 1.65 billion yuan selling shares on the board, according to their separate statements to the Shenzhen Stock Exchange.

Qian Weihai, an analyst at Shanghai Securities, is optimistic about the performance of the eight newcomers to ChiNext compared with the previous two batches, saying that "their overall potential is strong, and besides that, they are engaged in either unique sectors with room for growth or leading players in traditional industries".

Xinghui Auto Model is authorized to produce 190 replica models of the world's 21 top auto brands like BMW and Land Rover. That ranks them as the national leader in this area.

The company said it aims to raise 580.5 million yuan selling about 13.2 million shares at 43.98 yuan each, with the funds raised used to expand production capacity.

Shenzhen Sunwin Intelligent Co, China's top provider of system solutions for urban metros and railways, plans to raise 440 million yuan, according to its statement.

Beijing-headquartered Hwa Create Co said it aims to raise 521.9 million yuan. The company specializes in simulation systems, real-time test and control technology and high-speed digital systems, and are mainly for military use.

Inner Mongolia Free Han & Mongolia Pharmaceutical Co, Hiconics Drive Technology Co, Hubei Tech Semiconductors Co, Dingli Communications Corp and Shenzhen Tianyuan DIC Information Technology Co are also selling shares.

If all goes according to plan, ChiNext will boast a total of 44 companies.

Zhang Xiang, an analyst at Guo'du Securities, predicts the eight enterprises will add a 30 percent in net profit in 2010.

Shenzhen-based ChiNext, which started trading on Oct 30, 2009, is a secondary stock market for start-ups.

The ChiNext is designed to stregthen the capital-raising capabilities of smaller Chinese enterprises engaged in independent innovation, as well as those with high growth potential.

Funds raised through ChiNext IPOs cannot be used to invest in stocks, derivatives, funds or for venture capital investments.

According to a recent report by international accounting firm PricewaterhouseCoopers (PwC), funds raised through IPOs on the country's exchange markets will soar 73 percent to exceed 320 billion yuan this year.

Frank Lyn, China markets leader of PwC, said that financial services, infrastructure, industrial products, consumer goods and retail sectors will continue to be the key drivers of the China IPO sector in 2010.