(China Daily)
Updated: 2008-02-02 07:44

China Coal Energy Co rose 32 percent on its Shanghai debut on Friday, the smallest first-day share gain in more than a year.

China's second largest coal producer climbed 32 percent to 22.2 yuan at the 3pm close from the offer price of 16.83 yuan. That's the slimmest increase of 89 companies that have sold shares for the first time in Shanghai and Shenzhen since the start of 2007.

China Coal shares gained after pricing the shares at a discount to its Hong Kong-traded stock.

"We are now hit by the cold weather and the US subprime crisis," China Coal Chairman Jing Tianliang said on Friday. "Against this backdrop, I am happy with the debut performance."

The Beijing-based firm raised $25.7 billion yuan in the world's biggest share sale this year after investors ordered about 120 times the stock on sale, undeterred by tumbling global equity markets. Twenty-five companies halted plans for initial public offerings last month, the most in at least a decade.

China Coal priced its Shanghai shares on Jan 28 at an 18 percent discount to the closing price of its Hong-Kong listed shares on the same day. Companies typically price shares in Shanghai at a discount to their stock in Hong Kong, which is off-limits to most mainland investors, driving gains on debuts.

"It didn't gain as much as other stocks on debut because the valuation is already pretty high," said Shi Yu, an analyst at China Merchants Securities Co.

The share price gives the company a market capitalization of 264 billion yuan, compared with bigger rival China Shenhua Energy Co's 1.06 trillion yuan.

China, the world's second biggest energy consumer, uses coal to produce four-fifths of its electricity.

UBS AG, Europe's biggest bank by assets, increased its price forecasts for coal used in power plants in 2008 and 2009 as China's demand rises and rain disrupted supplies from Australia.

Thermal coal will average $100 a metric ton this year, and $125 a ton in 2009, up from previous estimates of $90 and $110, UBS analysts led by Stephen Oldfield and Ghee Peh said on Friday.

China Coal's Hong Kong-listed shares rose 3 percent to close at HK$18.42. The shares have surged more than four times since its listing in 2006, making it the third-best performing stock on the 48-member MSCI Asia Pacific Energy Index in the past year.

"The coal sector still offers quite good earnings compared with other Chinese companies because of substantial price increases and the ongoing coal shortages," Donovan Huang, an analyst at Nomura Securities Ltd, said before trading started.

Agencies

(China Daily 02/02/2008 page10)