King Refrigeration wins big in its Shanghai debut

Shares of Zhejiang King Refrigeration Industry Co (浙江國祥製冷), the first overseas-controlled company to sell local-currency stock in China, surged 22 percent on their trading debut, underlining investor demand for foreign-managed assets.

The Taiwanese-controlled air conditioner maker's shares rose to 8.92 yuan, from their offer price of 7.30 yuan, at the 3pm close local time on the Shanghai Stock Exchange, after earlier climbing as much as 25 percent to 9.16 yuan.

King Refrigeration is the first company to take advantage of a November 2001 ruling by China's government that allowed overseas companies to sell shares in China-incorporated companies of which they own at least 25 percent.

King Refrigeration is controlled by King Refrigeration Machinery Holdings Co (國祥製冷), Taiwan's biggest maker of industrial central air conditioners. The parent company raised 292 million yuan (US$35.2 million) selling 40 million shares on Dec. 15. It will use the proceeds to build and upgrade production plants.

"Investors went for the shares partly because it is the first foreign company to sell yuan shares in China, and also they expect a foreign venture to be better managed than many of the state-owned enterprises that are listed," said Fang Bingyin, a trader at Guotai Junan Securities Co in Shanghai.

King Refrigeration's offer price of 7.30 yuan each is 20 times the company's earnings per share last year, the highest of an unwritten limit, or about half the average price-earnings ratio of stocks traded on the benchmark Shanghai A-share index.

Home appliance maker Tsann Kuen (China) Enterprise Co (燦坤), 29 percent owned by Taiwan's EUPA Industry Corp, became the first company to sell foreign-currency shares in China in 1993.

King Refrigeration was set up by its parent company and four Chinese partners in Zhejiang Province in 1993. The company made 16.9 million yuan in profit in the first nine months of this year.