Report: Chinese companies likely to return after US listing

11:07, December 30, 2010      

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Inspired by the high price-earnings ratio and fundraising capability of China's Growth Enterprise Board (GEB), companies listed in the United States may form a solid trend of returning to China's capital markets in 2011, ChinaVenture Investment Consulting, Ltd. predicted in a report.

In 2010, a total of 34 Chinese companies went public through stock exchanges in the United States. Firms like Youku (NYSE: YOKU) and Dangdang (NYSE: DANG) swept the U.S. IPO market, and many more listed companies are still planning to go private.

Low stock prices

On Nov. 11, only months after listing, Shanghai-based Chemspec International, Ltd. (NYSE: CPC) announced that its chairman and CEO Yang Jianhua suggested the company purchase all the circulating shares for 8 U.S. dollars per American depository share.

Chemspec, a manufacturer of highly-engineered specialty chemicals, debuted on the New York Stock Exchange in June 2009 and raised a total of 72.7 million U.S. dollars. Its stock prices have always stayed below the offering price of 9 dollars.

The low prices made fundraising difficult, said Li Xue, a stock analyst.

"Relatively high costs of going public and the monitoring and regulation from government authorities are also the reasons," Li said.

Last year, Sinoenergy Corporation, a developer and operator of retail CNG stations, purchased back all the circulating shares and went private. In 2010, Tongjitang Chinese Medicines Co. (NYSE: TCM), Harbin Electric Inc. (NASDAQ: HRBN) and Fushi Copperweld, Inc. (NASDAQ: FSIN) have all disclosed plans to go private.

Returning home

Li Weidong, ChinaVenture's research director, estimated that those companies may choose to return to capital markets after going private.

"China's Growth Enterprise Board and the SME board are likely to be a boost," he added.

Narada Batteries, which went private from Singapore Exchange in 2005, conducted an IPO on China's Growth Enterprise Board this April. Tianjin Yaan Technology Electronic Co., which had also been listed on the Singapore Exchange and gone private, is heading for the GEB.

According to ChinaVenture, China's stock regulatory authorities will not object to the return of companies that have gone public overseas and will encourage outstanding enterprises to go to the A-share market.

By People's Daily Online

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