- Asia's biggest listing this year raised $3.6 billion
- Retail online orders were 683 times the tranche
- Company sells 2.11 billion shares
- Overallotment option could take that to 2.42 billion
July 2 (Reuters) - Shares of China Resources New Energy more than doubled at Thursday's trading debut in Shenzhen, after the wind and solar power firm raised 24.5 billion yuan ($3.6 billion) in Asia's biggest initial public offering this year.
The stock closed at 23.95 yuan, up 137% from its IPO price of 10.11 yuan. It had opened at 21.60 yuan and surged as much as 198% during the session, triggering a brief trading suspension.
The debut bucked a decline of nearly 3% in the blue chip index CSI300.
Sharp first-day jumps are not unusual in China, where IPO prices are often kept low and heavy demand from retail investors can drive steep gains on debut, when recent AI and chip-related listings have also soared.
"The successful listing suggests that investor risk appetite for sizeable A-share IPOs is improving," said Billy Toh Kian Hin, regional head of retail research at CGS International Securities.
The debut reinforced positive investor sentiment toward large-scale strategic listings in China, particularly for companies linked to national strategic priorities, he said.
These include companies in areas such as renewable energy, semiconductors, artificial intelligence infrastructure and other critical technologies, he added.
The debut is a test of efforts to attract major mainland listings and draw household savings back to the stock market after an IPO slowdown.
A-share IPOs, or listings on the Shanghai, Shenzhen and Beijing exchanges, raised $7.7 billion in the first half of the year, up 64.4% from the year-earlier period, LSEG data showed.
Total IPO proceeds for Chinese companies, including offshore listings, nearly doubled to $16.2 billion.
A revived IPO trading market could encourage more and bigger deals, including that of memory chip maker ChangXin Memory Technologies (CXMT), which plans a 29.5-billion-yuan Shanghai listing.
Toh said China Resources New Energy's listing could provide a supportive backdrop for upcoming onshore listings by Chinese AI and semiconductor companies, though investors would weigh them closely.
"Investor scrutiny is likely to be higher, given the memory chip sector's cyclical nature, capital intensity, and exposure to technology restrictions," he said.
OVERCAPACITY HAS LED TO WEAKER SHARES
China Resources New Energy is controlled by Hong Kong-listed China Resources Power, part of state-owned China Resources Group. It invests in, builds and runs wind and solar farms across China.
The country is the world's largest installer of renewable energy by far but that scale and industrial overcapacity has led to weaker share prices for some listed companies.
China's largest solar panel makers have posted years of loss while the CSI New Energy index, which tracks the clean energy sector, is still about 40% off a 2022 peak despite though rallying since late last year.
China Resources New Energy is primarily an operator of renewable energy infrastructure, not a manufacturer, and so could be more insulated from overcapacity concerns.
Guotai analysts said it operated 4% of China's wind power and 1.2% of its solar assets.
Its IPO is Shenzhen's biggest on record, LSEG data showed. Retail investors placed about 6.4 trillion yuan worth of orders for an online portion of the deal, making the retail tranche more than 683 times covered.
China Resources New Energy sold 2.11 billion shares before an over-allotment option, or about 16.2% of its enlarged share capital. If fully exercised, the sale will rise to 2.42 billion shares.
Listing proceeds will go toward investment for wind and solar projects.
The IPO comes as China looks to generate half of its electricity from non-fossil sources by 2030, even as producers battle falling power prices, grid limits and heavy competition.
($1=6.7859 Chinese yuan renminbi)
Reporting by Yantoultra Ngui in Singapore, Lewis Jackson in Beijing and Shanghai newsroom; Writing by Scott Murdoch; Editing by Muralikumar Anantharaman, Christopher Cushing and Clarence Fernandez
Source: Reuters