Dalian port plans Shanghai IPO to fund expansion

Dalian Port, which is listed in Hong Kong, aims to raise at least 3.67 billion yuan (US$500 million) from issuing a maximum of 1.2 billion A shares in a Shanghai listing, the state-owned port operator's initial public offering prospectus says.

The China Securities Regulatory Commission will meet on October 18 to decide whether to approve Dalian Port's listing application, the mainland securities watchdog's website said.

"Many Chinese companies with only H-share listings want A-share listings. It's something a lot of these companies are dreaming about. A-share prices fetch a premium of 20 to 30 per cent higher than H-shares on average," JP Morgan analyst Karen Li told the South China Morning Post.

For example, China Communications Construction, a state-owned port construction firm listed in Hong Kong, is working on an A-share listing, while Sichuan Expressway, which is listed in Hong Kong, had an A-share IPO in Shanghai last year, said Li.

"If you issue the same number of A-shares versus H-shares, you can raise more money," added Li.

Dalian Port will use 3.67 billion yuan of its Shanghai IPO proceeds to invest in 14 projects, of which the two most expensive are crude-oil-storage facilities costing 760 million yuan and 550 million yuan, said its prospectus. The 14 projects also include a 520 million yuan ore terminal, a 230 million yuan vehicle port and a 400 million yuan renovation of the old Dalian port district.

The port in the northeastern Chinese city of Dalian has a history of about 100 years of operations and is the eighth busiest mainland container port.

For the first nine months this year, its throughput rose 14.2 per cent to 3.85 TEUs.

The company earlier announced that on September 30, 2009, it signed an agreement to acquire various assets from its state-owned parent, Dalian Port Corporation, for which Dalian Port would issue no more than 1.2 billion shares to its parent to pay for these assets.

The initial consideration for the acquisition of the parent's assets is 2.8 billion yuan, subject to a final adjustment. The assets to be acquired include general cargo, bulk grain, passenger and ore terminals.

Assuming the acquisition is completed, Dalian Port forecasts its net profit for this year to be 759 million yuan measured according to Chinese accounting standards, or 779 million yuan under international accounting standards. Last year, Dalian Port's net profit was 609.27 million yuan according to international accounting standards.
(Source:www.cargonewsasia.com)