Telecom analysts said yesterday that Taiwan Cellular Corp's (
Taiwan Cellular yesterday moved its initial public offering forward by one week, announcing it would list shares on the TAISDAQ market on Sept. 19. The company plans to offer an initial 10 million shares at NT$86 each.
Although most analysts expect a strong response to the offering, some market watchers speculate the stock sale will suffer in the wake of Chunghwa Telecom's first share auction. During that sale, Chunghwa sold just 80 percent of its total shares it had on offer.
According to David Tung (
"The two companies are pretty similar in terms of revenues," Tung said. "But Taiwan Cellular's offering price is only NT$86, versus Chunghwa's NT$104. The price for Taiwan Cellular leaves a lot of room for upside" gain.
The potential for a share to advance usually attracts investors, who are looking for quick profits. According to one analyst who requested anonymity, Taiwan Cellular has "at least 20 percent upside" if priced at NT$86 per share.
Tung said Taiwan Cellular shares have been trading at roughly NT$84 per share on the gray market, and that indicates the offering price has been set at the right level.
The analyst said that the gray market usually undervalues a company due to a lack of trading security: there are no guarantees that a seller is legitimate.
Investors, therefore, pay lower prices to compensate for the risk of being sold bogus stock certificates.
The analyst said the recent listing of Nanya Technology (
"I think people will pick it up at that price ... the stock should rise for the first two days of trading," Tung said. "I'm very bullish on Taiwan Cellular."
One analyst, however, went against the grain, saying the IPO might be coming at a bad time.
"A lot of people hold Taiwan Cellular stocks," said Nathan Lin (
Lin predicted the stock would perform poorly not because of problems with Taiwan Cellular, but "because the whole market is performing badly."
According to Taiwan Cellular, 4.56 million customers subscribe to its mobile telecommunications services, giving the company a 32 percent share of the overall wireless market. The company reported operating revenues of NT$25 billion and profits of NT$8 billion for the first half of the year.
Taiwan Cellular plans to sell 10 million shares, out of a total 2.76 billion outstanding, through a public subscription slated to begin today. The official listing will come in September.
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