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China Construction reignites 2009 IPO dreams

By Yu Hongyan (China Daily)
Updated: 2009-01-15 07:56

China Construction headquarters in Beijing. [China Daily]

China State Construction Engineering Corp Ltd (China Construction), China's largest civil engineering company, will reignite its plan for an initial public offering (IPO) in 2009, a top official of the company said.

People familiar with the matter said they expect China Construction's IPO to come in the second half of the year.

The company got approval from China Securities Regulatory Commission to go public in June 2008 by issuing 12 billion A-shares on the Shanghai Stock Exchange to raise more than 40 billion yuan.

The new capital is designated to fund major construction projects and commercial housing development, and to supplement the company's liquidity, according to its share issue prospectus.

But the company was known to have put the plan on hold because of sluggish market conditions.

Related readings:  China Construction to continue IPO plan in 2009

"It is still our goal to go public," Yi Jun, president of the company, told reporters at a recent forum. "We will actively prepare for the IPO in 2009."

The company's profit in the first three quarters of 2008 amounted to 2.48 billion yuan on sales of 141.2 billion yuan, Yi said.

It posted a profit of 4.92 billion yuan for 2007, up 103.9 percent from 2006. Sales rose 26.4 percent to 168.3 billion yuan.

In its prospectus, China Construction listed 166 million yuan in total assets, and 140 million yuan of liabilities at the end of 2007.

"Under the gloomy market condition, investors will have a low evaluation on the construction sector, which is closely tied to the macro economic trend," said Wang Xiaoyong, industry analyst of Shenzhen-based China Merchants Securities.

"China Construction may not go public until the market recovers because they will be unlikely to accept too low an issue price," Wang estimated.

As a major player in China's home construction and land development, China Construction was the builder of such landmark projects as the National Aquatics Center, the new Central China Television headquarter in Beijing, and Shanghai World Financial Center, the tallest building in the country.

About 12 percent of the company's revenue came from overseas in the first half of 2008, and it has completed more than 5,000 construction projects in about 100 countries and regions since the 1970s.

With 76.7 billion yuan of contracts on hand at the end of September 2008, the company is well positioned to withstand the impact of the global recession, said Yi.

China Construction will focus on exploring new markets like Hong Kong and Macau, Singapore and Algeria, and make an effort to expand its presence in high-growth potential markets, according to Yi.