Nuclear SOE set for big China IPO

BEIJING -- China National Nuclear Power Co Ltd (CNNP) started taking subscriptions from investors on Tuesday, aiming to raise 13.19 billion yuan ($2.15 billion) for what will be the largest initial public offering (IPO) in China's A share market in four years.

Intending to issue 3.891 billion shares at 3.39 yuan a piece, the CNNP IPO could be the biggest in the A share market since Power Construction Corp of China's offering in September 2011.

CNNP's IPO price was 22.29 times the company's 2014 earnings, lower than an average earnings ratio of 22.32 for the industry, according to CNNP statements posted on the Shanghai Stock Exchange website on Tuesday.

Altogether, 1.17 billion CNNP shares, or 30 percent of the total, will be transacted online, while the rest will be traded offline, said the statements.

In the first three months this year, the company's operating revenue reached 6.36 billion yuan, surging 45.06 percent compared with the same period last year.

CNNP warned investors of possible risks caused by future policy changes concerning nuclear power and preferential tax.

China will increase its nuclear power capacity to 58 million kilowatts by 2020, a rise of 170 percent over the current level, said Xu Yuming, deputy director of the China Nuclear Energy Association last month.

CNNP is the largest of 23 companies that will kick off IPOs this week. The IPOs were estimated to lock up nearly 5 trillion yuan of liquidity. Under market rules, major shareholders of non-tradable stocks are subject to one or two years lock-up before they are permitted to trade.

CNNP is a subsidiary of China National Nuclear Corporation (CNNC), which invests, builds and operates nuclear power plants across China. Historically, CNNC successfully developed an atomic bomb, hydrogen bomb and nuclear submarines and built the first nuclear plant in the Chinese mainland.

Chinese stocks opened higher on Tuesday, with the benchmark Shanghai Composite Index up 0.33 percent, to open at 4,844.70.