Galaxy Securities Suspended After Surging 44% in Shanghai Debut

  • Brokerage raised almost $600 million in public offering
  • Offer valued stock at “undemanding” price-book: Citigroup

China Galaxy Securities Co. surged by the 44 percent daily limit in its Shanghai debut on Monday after the brokerage raised 4.09 billion yuan ($597 million) in a public offering.

Trading in the Beijing-based firm was suspended just after the market opened, as its stock jumped to 9.81 yuan from its offer price of 6.81 yuan. Its initial sale price valued the stock at an “undemanding” 1.1 times its estimated book value for this year, Citigroup Inc. analysts led by Judy Zhang said in a note dated Jan. 16.

“The high oversubscription rate of 1,440 times reflects strong investor demand, which is expected to drive up the share price significantly” after the offering, the analysts wrote. Galaxy ranks the highest among peers along with Haitong Securities Co. in terms of capital strength, they said.

Dramatic gains for newly listed shares in China have become commonplace amid support from abundant liquidity and a rule limiting sale valuations at 23 times earnings, which forces companies to sell shares at levels below their listed peers, Hao Hong, chief strategist at Bocom International Holdings Co., said in December.

Last year, mainland equities surged a median 392 percent in their first month after listing, the best return since Bloomberg began compiling such data in 1994.

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