China Southern Airlines IPO Oversubscribed 95
Times
China Southern Airlines, one of China's four major airlines,
which is planning an IPO on the Shanghai market, is oversubscribed
95 times.
This is in spite of the fact that the airlines has recently
been hit hard, and suffered an 83 percent fall in passengers
in May because of the SARS crisis. It predicts that profits
this year could fall more than 60 percent to 202.6 million
yuan.
The company is offering 1 billion shares for RMB2.7 billion
yuan. Applications for the shares have totaled 95.08 billion
shares. The underwriter, Galaxy Securities, said that
buyers would be selected by lottery.
Analysts said that the offering is popular because of
the low valuation. Although Chinese airlines have been
hit hard because of the SARS crisis, Chinese investors
feel that the upside for local airlines is still high.
The Chinese government has forced through reforms on the
airline industry, forcing consolidation into four major
airlines. China Southern is one of them.
Currently, there is debate in China about whether the
airlines are over-expanding their capacity. In addition,
the Chinese government is leaning toward an "open-skies"
policy, which would allow foreign airlines to compete
equally with local airlines in the China market.
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