Xinyi gets flat market reception

The mainland's largest windshield glass exporter Xinyi Glass Holdings made a flat trading debut yesterday amid sluggish market sentiment in the float glass industry.

Shares of Xinyi closed at HK$2 (26 US cents), the same as its offer and opening price on its first trading day. A total of 114.4 million shares changed hands with a total value of around HK$230.8 million (US$29.6 million).

"It is okay for Xinyi to sit at its offer price as investors believed the valuation to be higher than the market's expectations," said Ben Kwong, associate director of KGI Asia, yesterday.

Xinyi raised HK$750 million (US$96.2 million) by selling 375 million shares at HK$2 each.

Sponsored by Kingsway Capital, Xinyi's retail offering was 55.6 times oversubscribed. Analyst said the valuation was not that attractive and the market reaction to the listing was moderate.

"The market generally worries about the industry's potential growth prospects," Kwong said, adding investors were cautious about the outlook of the glass industry.

Some analysts said only around 12 per cent of China-made float glass is up to international standards and Xinyi is a newcomer to the industry, which means greater challenges and risks for the company.

Xinyi, however, brushed aside concerns about its development prospects, citing its experience and expertise in the sector.

The company plans to spend HK$440 million (US$56.4 million) of its net proceeds to establish two float glass production lines in Dongguan. Xinyi will also use HK$65 million (US$8.3 million) to buy machinery and HK$18 million (US$2.3 million) to install three automobile glass production lines in Shenzhen, said company sources recently.

Also yesterday, Foxconn International Holdings, another debutante and the third largest global handset-making unit, received a cold response from investors as the market expected lower profit margin growth amidst fierce market competition.

Shares of Foxconn tumbled 2.71 per cent, finishing at HK$3.775 (48 US cents) in its first day of trading, below its offer price of HK$3.88 (49 US cents).

Foxconn, the subsidiary of Taiwan's Hon Hai Precision Industry Company Limited, raised US$432.5 million (US$55.4 million) from its IPO.

600450 Xinyi gets flat market reception
Date: 7 February 2005

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