SHANGHAI (XFN-ASIA) - China Pacific Insurance (Group) Co Ltd (SHA 601601) closed up 60.6 pct at 48.17 on its first day of trading in Shanghai, after gains of as much as 73 pct intraday, dealers said.
The stock, which was offered at 30 yuan, was buoyed by the usual enthusiasm for major new listings and a positive outlook for the domestic insurance market.
China Pacific Insurance raised net proceeds of 29.03 bln yuan from the sale of 1 bln A-shares. It attracted 2.8 trln yuan in subscriptions.
The company becomes the third insurer to list in Shanghai this year after China Life Insurance Co Ltd and Ping An Insurance (Group) Company of China Ltd.
The stock opened at 51.00 yuan, at the top end of analyst projections of about 40-50 yuan for the first day.
Wu Jiangang, a Beijng-based analyst with Guosen Securities, said a reasonable valuation for the stock is 45.42-52.14.
'Compared with the two other listed insurance companies, CPIC's industry position is relatively weak but it still has great growth potential,' Wu said.
CPIC has balanced life and property insurance businesses, with a 9.5 pct life market share and an 11.6 pct property share in the first half. About 65 pct of its premium income was derived from life and 35 pct from property.
'This sets it apart from its peers, as Ping An is more like a financial conglomerate and China Life Insurance focuses on life insurance,' Li Lei, a Beijing-based analyst at China Securities Research said.
'The income from life insurance is more steady, giving the company a competitive advantage,' Wu said.' I am positive on the growth of the life insurance in the next few years since insurance penetration is at such a low level.'
He added that the CPIC's premium income from life insurance will grow annually by about 20 pct, while China Life Insurance's growth at 10 pct, assuming economic growth of about 8-9 pct a year.
Wu projects earnings per share for CPIC at 1.15 yuan in 2008 and 1.66 yuan in 2009.
The debut of a third insurance company in Shanghai also marks the end of an IPO boom this year led by PetroChina and China Railway. China has encouraged such domestic listings to help absorb excess liquidity and improve the overall quality of domestic listed companies.
China Pacific also plans to issue up to 900 mln H-shares in Hong Kong after it completes its Shanghai listing. However, it has not provided a timetable for a Hong Kong listing.
'We expect it to start trading in Hong Kong in early January,' Li with China Securities Research said.
If sucessful, China Pacific will become the second Chinese company to launch an initial IPO in the mainland before listing in Hong Kong, following China Railway.
China Railway Group Ltd listed in Shanghai on Dec 3, and in Hong Kong three days later.
After CPIC's A-share issue, Baosteel group held the top stake of 17.4 pct in the insurer, while Parallel Investors Holdings Ltd and Carlyle Holdings Mauritius Ltd, both controlled by US investment firm Carlyle Group, held a combined 17.32 pct.
China International Capital Corp (CICC) and UBS Securities were the joint lead underwriters for CPIC's offering.
(1 usd=7.4 yuan)
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