China Coal rises 13 pct on HK debut

Shares of China Coal Energy Co. rose nearly 13 percent on their Hong Kong debut on Tuesday, underperforming some recent IPOs as investors cooled towards the resources sector and the broader market fell.

Shares of state-backed China Coal, the industry No. 2, closed at HK$4.56, compared with an IPO price of HK$4.05, after it raised US$1.69 billion from a deal that generated heavy oversubscription and was priced at the top of its range.

Its first-day performance failed to match that of a trio of deals last Friday, each of which rose more than 29 percent on their debuts, with shares of hotel operator Shanghai Jin Jiang International Hotels jumping 73 percent.

“The industry is not as attractive as the IPOs from sectors like telecoms,” said Ben Kwong, chief operating officer at KGI Asia, who had expected the stock to rise 10-20 percent.

“The performance is negatively affected by the market’s performance as a whole.”

MSCI’s energy sub-index of Asian stocks outside Japan fell 2.8 percent on Tuesday on uncertainty about the outlook for commodity prices.

China Coal shares traded in a narrow range between HK$4.40 and HK$4.60, and were weighed down by a weaker market that saw the benchmark Hang Seng Index fall by 1.19 percent.

The index of mainland Chinese firms listed in Hong Kong ended 1.07 percent lower after hitting an all-time high on Monday.

Shares in top Chinese coal producer Shenhua Energy Corp. fell 3.85 percent on Tuesday, while smaller rival Yanzhou Coal Mining Co. ended 2.33 percent lower.

Hong Kong’s main stock market has seen a record US$39.6 billion in new listings this year. Sunlight REIT, which is being sold by Henderson Land , will hit the market on Thursday with its US$350 million IPO, the year’s last big deal.

A Macau casino joint venture run by the sons of Australian media magnate Kerry Packer and casino tycoon Stanley Ho raised more than US$1.14 billion in a Nasdaq listing when it priced its new shares above an indicative range early on Tuesday.

China Coal’s rise values its shares at 16.5 times 2006 earnings, compared with Shenhua Energy’s 16.7 times and Yanzhou’s 10.9 times 2006 profits.

China is the world’s biggest coal user, accounting for 37 percent of global consumption.

The country is fighting to keep up with demand driven by its 10 percent economic growth, as coal made up 70 percent of the mainland’s energy use in 2005.

China ranks third in proven coal reserves, coming behind the United States and Russia. China Coal’s chairman said earlier this month that prices should remain high on strong demand.

China International Capital Corp., Citigroup and Morgan Stanley handled China Coal’s deal. (US$=HK$7.8)