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.

Want to receive the latest China news in your mailbox every day? Sign up here to receive China Business Express.