Hong Kong-listed firm's Shanghai IPO hits daily increase limit

Qingdao Port International Co Ltd launched its initial public offering on the main board of the Shanghai Stock Exchange on Monday, the first Hong Kong-listed company to make its debut in the A-share market this year.

With an offering price of 4.61 yuan (68 cents) per share, Qingdao Port opened at 5.53 yuan per share on its first trading day. The price hit the daily increase limit of 10 percent during the first few minutes of trading, to close at 6.64 yuan.

The benchmark Shanghai Composite Index gained 0.56 percent to close at 2610.51 points on Monday.

The financing raised via the IPO, around 2 billion yuan, will be used to improve the port's infrastructure, enhance delivery capacity, upgrade traditional businesses and improve its service quality, so the port can seek greener and more sustainable growth, said Li Fengli, chairman of Qingdao Port.

According to its prospectus, the port saw its net profit increase by 21.67 percent year-on-year in 2015, 16.17 percent in 2016 and 40.94 percent in 2017. The company registered a net profit of 2.85 billion in the first three quarters of 2018, up 16.89 percent year-on-year.

Data provided by Shanghai International Shipping Institute showed that Qingdao Port in Shandong province remains the eighth-largest container port in the world, with its container throughput coming in at 14.35 million TEUs, or twenty-foot equivalent units, between January and September last year, up 4.46 percent from a year earlier.

Analysts from China Fortune Securities wrote in a note that Qingdao Port has built up a modern comprehensive logistics business model over the past few years, by combining cargo handling and integrated logistics management. By forming joint ventures with logistics industry leaders, it has enhanced capacity to provide services throughout the whole supply chain.

Qingdao Port went public on Hong Kong's bourse in June 2014. With an offering price of HK$3.76(48 cents) per share, the company seemed lackluster over the past few years.

However, the successful listing on the A-share market brought fresh impetus to the company's performance in the Hong Kong market, with its prices up 2.73 percent to close at HK$4.9 on Monday, while the benchmark Hang Seng Index rose 0.28 percent.

The company's stock price seemed to be undervalued in Hong Kong, which indicated that people's confidence in the real economy has been undervalued, Li explained. The company's return to the A-share market will bring more confidence to investors and industries, he added.

"Qingdao Port will continue to witness the steady growth of China's economy. We will not provide instant profit but rather promise long-term income stability to investors," he said.

With the debut on Monday, Qingdao Port becomes the third Chinese mainland port to have issued both A shares and H shares.

Previously, Qinhuangdao Port in Hebei province listed on the A-share market in August 2017 and China Merchants Port Group launched its A-share listing in late December last year.

Most port companies that have listed in Hong Kong have invested in numerous facilities so that they can better coordinate, said Yang Lingxiu, senior analyst at the strategy department of CITIC Securities.

"Chinese ports have benefited from the country's rapid economic growth in the past decade. But integration will be the theme for their development in the future," he said.