Jinduicheng Molybdenum IPO Review: Finance Trading Times

Jinduicheng Molybdenum IPO Review

Another IPO is set to hit the Chinese stock markets.
Jinduicheng Molybdenum Group Co, which is known as the largest among Asia for the production of the material. The Jinduicheng Molybdenum Company plans to raise somewhere around $1.3 billion or 8.9 billion Yuan in its IPO planned to be listed on Shanghai stock exchange.

As per the filing, the firm has given an indicative price range of 15.00 to 16.57 yuan per share, making the price to earnings for the Jinduicheng Molybdenum company to be in the range of somewhere around 15.8 to 17.4, for its earnings in 2006.

However, the market experts had earlier predicted that the offer price would be atleast 20 times the earnings, hence this valuation has come as a pleasant surprise to the market.
The China stock market is down by more than 40 percent since October 2007. Coming out with an IPO in such down time is a something that not only affects the pricing of shares, but also implies a risk in terms of brand building of the company, in case the IPO is not taken up positively by the Stock markets.
Jinduicheng plans to issue as many as 538 million new local currency A shares, or 20 percent of its expanded capital.

Related: E-land China IPO: 350 million Hong Kong IPO

The proceeds from the IPO will be primarily used for expansion of production lines. Around 7.65 billion yuan will be utilized for expansion of production and upgrading of manufacturing technology. Any extra proceeds would be used to supplement its working capital.
The IPO will open for subscriptions on Tuesday and Wednesday, and the company intends to list in Shanghai on April 17. Thirty percent of the offer is earmarked for institutions and the rest for retail investors, but the ratio may be shifted in favour of the retail tranche if demand proves strong.
As per the news and data, an annual output of about 13,000 tonnes of molybdenum, a hard, silvery-white metallic element used to toughen alloy steel, Jinduicheng is the largest integrated producer in Asia and the third largest in the world.

China accounts for nearly 40 percent of the world's molybdenum reserves. Jinduicheng's exports account for 10 percent of the world market. Table of Contents
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