New GEM listco P/E at listing
Dingli 123.9
Rastar 91.5
Furui 82.8
Sunwin 81.5
Tianyuan 78.95
Hwa Create 76.8
TechSem 66.6
Hiconics 58.58

THE SHENZHEN GEM board, China’s version of the Nasdaq, welcomed eight new listed members today, bringing the total to 44.

The GEM, also called ChiNext, continues to outdo regional peer boards, though this batch only had one candidate with a triple digit P/E ratio, and if recent IPOs are any indication, this will jump even higher in open trade, according to the Chinese language story from Sinafinance.

Eight firms announced their IPO prices on Tuesday and today began initial share sales for listings on the Shenzhen GEM board, also known as Chinext.

Telecom equipment maker Dingli (世纪鼎利) topped the price list at 88 yuan per share, which if using their 2008 full year earnings gives them a current price-to-earnings ratio of 123.9 times. They plan to issue 14 mln shares on the GEM to start things off. If successful, the listing would raise some 1.232 bln yuan, surpassing the underwriter’s originally stated goal of 1.019 bln yuan.

Dingli not only tops the list among the new listcos in terms of price per share, but also is the only one in the new batch to have a triple digit P/E ratio.

This is largely due to recent strong performance and expectations that the telecom equipment supplier will continue to benefit from the rapid growth of 3G systems in China and elsewhere.

Dingli is seen having a competitive strength in sector-leading innovation in the area of wireless and web-based technology application knowhow.

Dingli is riding high on China's 3G addiction. Photo: Dingli

Indeed, for the January-to-September period of this year, the company’s core revenue rose over 240% year-on-year to 201.1 mln yuan. This produced a net profit in the first nine months of 78.7 mln yuan, sporting an impressive profit margin of 39%.

Next among today’s new Shenzhen GEM listed firms comes auto mould firm Rastar (星辉车模) at 43.98 yuan per share, which means a 91.49 P/E using 2008 net profit results. The 13.2 mln shares on offer are intended to raise some 581 mln yuan, overshooting the original goal of 448 mln yuan.

Semiconductor maker TechSem (台基股份) priced its shares at 41.3 yuan apiece for a 66.61 P/E. At this price, TechSem’s 15 mln shares will realize 619.5 mln yuan, outdoing the initial target of 354.5 mln by a longshot.

Hiconics (合康变频), an electronic equipment producer, priced its shares at 34.16 yuan per, and was the only of today’s eight new GEM members to compare to earnings from 2009 to give it a P/E of 58.58 times. It will put up 30 mln shares to raise 1.04 bln yuan, higher than the 693 mln planned at the outset.

Anti-forgery detector maker Hwa Create’s (华力创通) 17 mln shares at 30.7 yuan apiece give it a P/E of 76.75 times. Raised capital will reach 521.9 mln yuan, higher than the original target of 325.7 mln yuan.

Communications technology firm Shenzhen Tianyuan’s (天源迪科) 27 mln shares at 30 yuan per share made for a 78.95 P/E. The company will raise 810 mln yuan, higher than the 550 mln target.

Drugmaker Furui’s (福瑞股份) 19 mln shares at 28.98 yuan apiece produce a 82.8 times P/E. Raised capital is 551 mln yuan, versus 424 mln.

Lastly, transportation firm Sunwin Intelligent’s (赛为智能) 20 mln shares at 22 yuan per share make for a P/E ratio of 81.5 times. Raised capital is 440 mln yuan, higher than the 320 mln originally targeted.

Sunwin is a leading domestic player in the artificial intelligence technology arena.

This is latest batch of companies to be approved by the China Securities Regulatory Commission (CSRC) since the GEM was launched in October 2009.

The total number of listcos now increases to 44, with many analysts anticipating that the approval rate will average around eight IPOs monthly going forward.

The eight newcomers join eight peers who listed on the GEM Christmas Day.

The Shenzhen GEM board, patterned after the Nasdaq, is expected to eventually have more than 300 listed firms.

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