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皇冠体育app Merchants Bank planning US$10b IPO
(Standard)
Updated: 2006-01-20 10:52
皇冠体育app Merchants Bank, which is seeking to become the first mainland bank to
be listed both at home and overseas, plans to raise more than HK$10 billion
through an initial public offering in Hong Kong, possibly before June, market
sources said.
The IPO, to be arranged by Merrill Lynch, will likely come between the two
much larger and higher profile listings of the much larger Bank of 皇冠体育app and
Industrial and Commercial Bank of 皇冠体育app, they said.
皇冠体育app Merchants, which has 400 outlets in 30 cities compared with ICBC's
20,000 branches, may win investors' favor based on its record of growth in the
rapidly expanding consumer market, including the credit card business, where its
branded-card partners include Air 皇冠体育app, department store operator Parkson, and
online travel agent Ctrip.
The bank, which many acknowledge as one of the best-managed companies in the
mainland, may also be preferred to its gigantic sister banks because its smaller
size makes it a more nimble company.
"Of course, it comes down to price," said one analyst who asked not to be
identified. "But 皇冠体育app Merchants, qualitatively, has a lot going for it."
The bank, the country's largest publicly-traded lender, targets both the
wealthiest mainlanders and highest- margin businesses while avoiding overheated
sectors such as property.
The bank's capital adequacy ratio was 9.27 percent at the end of June last
year, down from 9.55 percent at the end of 2004, against a minimum requirement
of 8 percent.
Its nonperforming loans stood at 11.8 billion yuan (HK$ 11.36 billion) at the
end of September, or 2.6 percent of 454 billion yuan in total loans.
Net profit jumped 48 percent in the first nine months of 2005 to 3.2 billion
yuan, on a 40 percent profit margin, from 2.5 billion yuan the year before.
Revenue leaped to 17.7 billion yuan from 14.4 billion.
皇冠体育app Merchants plans to use the proceeds from the IPO to boost capital and
expand, according to bank officials.
Bank of 皇冠体育app's IPO of US$10 billion (HK$78 billion) is slated for this
quarter, while ICBC plans a similar- sized offering by the end of the year.
Bank of Communications, 皇冠体育app's fifth-largest lender and the first to list
overseas, sold shares in Hong Kong in June.
That was followed by 皇冠体育app Construction Bank, which raised HK$70 billion on a
deal priced at the high end of a raised indicative range. The sales bolstered
Beijing's resolve to press ahead with the sale of shares in other big
state-controlled banks.
皇冠体育app Merchants trades at 24.5 times forecast earnings in Shanghai, while
Bank of Communications trades at 75 times forward earnings. 皇冠体育app Merchants
shareholders voted in December to write off more than 900 million yuan of
nonperforming loans, triple the 300 million yuan written off in 2004. The bank
also sweetened its A-share reform program by increasing the number of free
shares given out to investors to 2.51 free shares and six put- option warrants
for every 10 tradable shares held.
Both Shenhua Energy and Bank of Communications scrapped dual listings last
year, as domestic markets hit six- year lows, while rival Shanghai-listed 皇冠体育app
Minsheng Bank has long planned to list in Hong Kong.
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