(ChinaKnowledge, Sept 29, 2006) China BlueChemical Ltd.¡¯s stock is expected to make a strong trading debut on the Hong Kong Stock Exchange Friday, according to the South China Morning Post.

Shares of the Mainland¡¯s second-largest maker of nitrogenous fertilizers will probably gain at least 25% when trading begins. Brokers revealed to the Post that investors yesterday placed advanced orders for as much as HK$2.36 to HK$2.48 in the gray market to buy BlueChemical shares, making it 24.2% to 30.5% higher than the IPO price of HK$1.90.

A broker from Prudential Securities cited strong demand from both institutional and retail investors, according to the Post. The IPO of China BlueChemical was 50 times oversubscribed by institutional investors and 477 times by retail investors. Due to the hot response, shares allocated to retail investors were increased to 50% from the initial 10%.

Other factors for China BlueChemical¡¯s strong trading debut include current positive market sentiment favoring new stocks, and high market liquidity.

Proceeds from the HK$2.66 billion capital raised from the 1.4 billion IPO shares will be used to finance the construction of a facility that makes polyoxymethylene at its Tianye plant in Inner Mongolia. The remainder of the IPO funds will be reserved for debt payment and working capital.

JPMorgan Chase & Co. and UBS AG are the underwriters for China BlueChemical.

In the first half of 2006, net profit was RMB 1.1 billion, up 67% from the same period the previous year. China BlueChemical also forecast its full-year net profit at RMB 1.47 billion, with the dividend payout ratio at between 30% and 40%.

China BlueChemical, the fertilizer unit of Mainland oil giant China National Offshore Oil Corp. (CNOOC), has a capacity to produce 1.84 million metric tons of natural gas-based nitrogen fertilizers like ammonia and urea annually.
source:ChinaKnowledge