Regulators begin assessing logistics firm's IPO bid

Regulators have started examining a 10-billion-yuan ($1.5 billion) IPO application by China Postal Express & Logistics Co Ltd.

Approval would make it the first company in China's logistics sector to list on a stock exchange. It would also be the biggest IPO so far this year on the A-share market.

The State-owned company filed a prospectus with the China Securities Regulatory Commission on April 28. CPEL wants to issue 4 billion new shares to raise at least 9.97 billion yuan for 30 projects, including purchasing planes and vehicles and construction of a logistics center. It currently has 8 billion outstanding privately held shares, each valued at 1.58 yuan.

China Postal Express & Logistics, which also owns Express Mail Services, was set up in 2010 by China Post Group to inherit its package delivery business.

However, because it has not yet been trading for three full years, the qualification period required for companies to go public, the State Council is required to assess the IPO and decide whether it will be given the green light.

The company has more than 45,00 outlets in 31 provinces and regions nationwide and has the ability to deliver to 200 countries. As of the end of 2011, it had assets totaling 22.4 billion yuan, the highest in the industry, and made a profit of 902 million yuan.

The plan to go public comes as an upsurge in e-commerce 0China's package-delivery sector. Revenue from e-commerce has "exploded" over the past three years, increasing by an average of 80 percent year-on-year, according to the China E-commerce Research Center. At present, around 7,000 package-delivery companies are registered in China, with 52 of them conducting inter-provincial business.

However, China Postal Express & Logistics' business growth has lagged the industry average in recent years, and many online shoppers have complained about low delivery times.

Statistics from the State Post Bureau show that industry revenue grew 31.9 percent in 2011, almost twice the 16.3 percent registered by the company.

A bulk of the money the company hopes to raise will be used to reduce delivery times. More than 20 of the 30 planned projects involve mail processing and logistics centers throughout the country. The company also plans to purchase more than 10,000 new vehicles and seven planes.