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Everbright Securities Co, the country's 11th-largest brokerage by assets, is likely to raise as much as 10.96 billion yuan ($1.6 billion) in its initial public offering (IPO) after it fixed an indicative price range of 19 yuan to 21.08 yuan per share on Sunday.
The company, a subsidiary of the nation's financial giant China Everbright Group, will sell no more than 520 million yuan-denominated A shares, or 15.21 percent of its enlarged capital, ahead of a listing on the Shanghai Stock Exchange.
It will be the first listed Chinese brokerage in almost seven years, after CITIC Securities Co's December 2002 deal. The China Securities Regulatory Commission lifted a nine-month ban and resumed IPOs this June.
"The company will start trading no later than Aug 19," Luo Zhefu, vice-president of Everbright Securities, said in an online roadshow yesterday.
Institutional investors applied for 156 million shares through the so-called offline tranche yesterday.
Everbright Securities' sale values the brokerage at 53 to 59 times the firm's 2008 earnings per share. The range is higher than analysts' expectations of 15 to 20 yuan.
According to a report from Wind Info, the price-earnings ratio of Everbright Securities Co has topped the list of IPOs that were issued after June, and it is also the fifth highest price-earnings ratio in the history of yuan-denominated A-share listings.
"Last year was one of the most difficult years for securities companies and the ratio calculated, based on the company's 2008 net profit, was just for reference," Gui Shuifa, vice-president of Orient Securities, the lead underwriter of the IPO, said in the online roadshow.
"It doesn't reflect the future development of the company and we will see the launching P/E ratio as reasonable at the end of 2009," Gui said.
"We want to use the proceeds to replenish working capital, to make the company bigger and stronger through mergers and acquisitions," Luo Zhefu said.
Everbright Securities plans to increase the number of outlets to more than 120 either by opening new ones or acquiring sales offices from competitors, according to its share sale document.
The company reported a net profit of 1.28 billion yuan in the first half of this year, which even exceeded the overall net profit of 1.22 billion yuan in 2008.
As the domestic initial public offering market continues to pick up, China Merchants Securities Co and Industrial Securities Co are also preparing for IPOs.
China Merchants Securities Co is expected to be the next stock brokerage that could go public.
