Monday is crunch time for Everbright IPO bid

By Wang Yanlin  |   2008-6-28  |     NEWSPAPER EDITION

THE China Securities Regulatory Commission will review Everbright Securities Corp Ltd's proposal to list on Monday, possibly making it the first brokerage to launch an initial public offering in the past five years. The brokerage plans to issue 520 million shares with a net asset value for each share of 3.45 yuan (50 US cents).

Analysts estimated the firm may raise more than 13 billion yuan in the IPO, based on average price-to-earnings ratio of brokerages and Everbright Securities' earnings of 1.68 yuan per share by the end of last year.

If Everbright Securities wins approval from the CSRC for the listing, it will become the third brokerage to offer a direct IPO after approvals were given to CITIC Securities Co in 2003 and Hongyuan Securities Co in 1999.

An IPO applicant is required to be profitable for three consecutive years and a direct IPO is encouraged to prevent risks such as insider trading.

But some brokers have managed to sell shares earlier by sidestepping the rules through "back-door" listings.

Haitong Securities Co, Guoyuan Securities Co, Northeast Securities Co and Sinolink Securities have succeeded in tapping public funds after asset restructuring with some companies that are already listed.

"Some brokerage firms are still waiting to get the license for a listing. The central government certainly prefers direct IPOs than back-door listings and makes Everbright Securities a good example," said Zhang Qi, an analyst with Haitong Securities Co.

Last year, Everbright Securities' profit jumped sixfold to 4.7 billion yuan and its revenue from brokerage business rose 521 percent to 4.3 billion yuan, ranking it among the top 10 domestic brokers.

Besides Everbright, earlier reports had indicated at least five others were in the race to get a listing license - Orient Securities Co, Guotai Jun'an Securities Co, Huatai Securities Co, China Merchant Securities Corp Ltd and Western Securities Co.