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Sichuan Expressway's shares more than doubled in their listing debut on the Shanghai Stock Exchange on Monday, buoyed by the firm's strong growth prospects and a relatively low IPO price, but also hinted at heated speculation in the first listing on the bourse since last August.
The shares' strong debut bodes well for a series of listings lining up on the mainland since an IPO ban was lifted last month, including the expected launch of trade on Wednesday for China State Construction Engineering Corp, which last week raised 50.2 billion yuan ($7.3 billion) in the world's largest IPO this year.
Local-currency A shares in Sichuan Expressway, which is also listed in Hong Kong, kicked off trading at 7.60 yuan yuan, up from their IPO price of 3.60 yuan.
The opening price was much stronger than market expectations.
A Reuters survey of six industry analysts last week predicted the firm's Shanghai A shares would trade around 5.0 yuan on Monday, up 40 percent from their IPO price. Even the highest forecast of a wide range was only at 6.0 yuan.
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"That's really too much speculation, apparently propelled by excessive liquidity in the system," said Huatai Securities analyst Zhou Lin in Nanjing.
"Strong corporate listing prices will boost an 'easy-profit' mentality and bode well for future IPOs, but high prices for newcomers on the debut trading day and an expected fall as they return to normal valuations in coming weeks will hurt the market."
Sichuan Expressway's opening price gave its A shares a dramatic 153 percent premium over the HK$3.41 closing price for its Hong Kong-listed H shares on Friday.
Mainland-listed A shares of dual-listed Chinese firms often enjoy big premiums over their Hong Kong-listed counterparts, partly due to a lack of investment channels in the mainland, but the average premium was only at 40 percent at Friday's close.
Twenty minutes after trading, Sichuan Expressway's A shares fell slightly to 7.30 yuan from the opening price after hitting an intraday high of 7.97 yuan.
The toll road operator raised 1.8 billion ($264 million) in its Shanghai initial public offering (IPO) earlier this month, which was 414 times subscribed in its key retail portion.
Its issue of 500 million yuan-denominated A shares, or 16.35 percent of its expanded share capital, is mainly to purchase expressway assets from its controlling shareholder.
Sichuan Expressway's strong gains follow the trajectory of China's first two firms to be listed after a 10-month suspension, on the smaller Shenzhen Stock Exchange.
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Data is a real-time snapshot *Data is delayed at least 15 minutes