Shaanxi Coal Industry Co., China’s third-largest producer, cut its initial public offering by 59 percent to 4 billion yuan ($661 million), the second Chinese energy stock to reduce an equity raising this week.
It will sell 1 billion A-shares at 4 yuan apiece in Shanghai, the Xi’an, Shaanxi province-based company said today in a statement. That’s down from the 9.83 billion yuan it estimated on Jan. 8 and compares with an IPO target of 17.2 billion yuan announced in 2011.
“The market sentiment for the entire coal sector is pretty poor,” Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd. said today. “The timing of the IPO isn’t helping them and the only way they can sell is by pricing the stock cheaply.”
The cut follows a similar move by Power Assets Holdings Ltd., which runs one of Hong Kong’s two electricity utilities. Power Assets said on Jan. 12 it would reduce the size of its offering to a 50.1 percent stake from 70 percent as growth slows in Hong Kong.
The Shaanxi Coal offering is part of China’s move to restart IPOs after a halt that began in October 2012 as the securities regulator cracked down on fraud and misconduct among advisers and issuers. Regulators announced the plan to end the freeze on Nov. 30 and more than 700 companies have applied to sell shares, a pipeline that could tax investor appetite.
The Bloomberg Asia Pacific Coal Index, which includes 26 producers, is down 6.5 percent this year, after a 37 percent decline last year. The Bloomberg Asia Pacific Utilities Index declined 2.9 percent from a year ago.
Concern over strict government regulation on coal as part of efforts to curb pollution have weighed on coal stocks, UOB’s Lau said.
Shaanxi Coal has no further comment beyond its exchange statements, said a woman named Li who answered the phone at the company’s investor relations department. She declined to give her full name or title.