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Air China, the country's largest airline, will raise HK$8.36 billion after pricing its Hong Kong and London initial public offering (IPO) at the high end of its price range, media reports said. It will sell 2.805 billion shares, or 31 per cent of its enlarged equity, at HK$2.98 per share. Its indicative range was HK$2.35-HK$3.10.<\/p>\n
<\/p>\n
Hong Kong flag carrier Cathay Pacific will pay HK$2.7 billion for 905 million shares in Air China.<\/p>\n
All told, investors subscribed for more than US$20 billion (HK$156 billion) worth of stock, the sources said.<\/p>\n
Hong Kong retail investors subscribed for US$9 billion, or 83 times the shares available to them. As a result, the retail portion of the sale was increased to 40 per cent from 10 per cent.<\/p>\n
Institutional investors placed orders for around US$11.5 billion, or about 40 times the total shares available to fund managers, after the expansion of the retail tranche and excluding Cathay's stake.<\/p>\n
The stock offering was managed by Merrill Lynch and China International Capital (CICC). Both investment banks declined to comment.<\/p>\n
Air China – the last of China's three main carriers to list – will make its trading debut in Hong Kong and London on December 15.<\/p>\n
BOC International airlines analyst Julie Tang said in Shanghai good timing helped Air China's IPO, as the Hong Kong stock market approached a four-year high last week.<\/p>\n
\"It's exactly the right time for the airline to list,\" she said. \"Air China has since its inception been the country's best airline and demand for mainland airline stock is very high. Oil prices and jet fuel prices have also dropped recently, and historically airline shares do well when this happens. Finally, there are expectations of an appreciation in China's currency soon.\"<\/p>\n
China's airline sector is forecast to grow by around 15 per cent in 2005 and 2006, and although the sector is fraught with risk – everything from high oil prices to terrorism to freak occurrences like the Sars outbreak – demand for all mainland consumer-related stocks remains high.<\/p>\n
Long-term mainland growth in leisure and business travel should boost Air China's fortunes. According to a World Travel and Tourism Council report last year, by 2020 around 100 million Chinese will be travelling abroad each year. Total outbound and inbound tourism receipts should reach 2.56 trillion yuan (HK$2.4 trillion) by 2013, making China the fourth-largest in the world tourism industry.<\/p>\n
Air China's shares were sold at 10.9 times forecast 2005 earnings, a discount to mainland rivals. Shanghai-based China Eastern Airlines, which is listed in Hong Kong and Shanghai, trades at 11.42 times 2005 earnings. Guangdong-based China Southern Airlines, which has shares listed in both those markets and New York, too, is trading at 14.58 times next year's earnings.<\/p>\n","protected":false},"excerpt":{"rendered":"
Air China, the country's largest airline, will raise HK$8.36 billion after pricing its Hong Kong and London initial public offering (IPO) at the high end of its price range, media reports said. It will sell 2.805 billion shares, or 31 per cent of its enlarged equity, at HK$2.98 per share. Its indicative range was HK$2.35-HK$3.10.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12723],"tags":[],"class_list":["post-35218","post","type-post","status-publish","format-standard","hentry","category-english"],"_links":{"self":[{"href":"https:\/\/www.chinahospitalitynews.com\/cn\/wp-json\/wp\/v2\/posts\/35218","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.chinahospitalitynews.com\/cn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chinahospitalitynews.com\/cn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chinahospitalitynews.com\/cn\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chinahospitalitynews.com\/cn\/wp-json\/wp\/v2\/comments?post=35218"}],"version-history":[{"count":0,"href":"https:\/\/www.chinahospitalitynews.com\/cn\/wp-json\/wp\/v2\/posts\/35218\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.chinahospitalitynews.com\/cn\/wp-json\/wp\/v2\/media?parent=35218"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chinahospitalitynews.com\/cn\/wp-json\/wp\/v2\/categories?post=35218"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chinahospitalitynews.com\/cn\/wp-json\/wp\/v2\/tags?post=35218"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}