China nuclear power giant surges on stock debut

A Chinese nuclear power giant surged 44 percent on its first day of trading Wednesday after launching the country's biggest domestic stock offer in four years, as investors bet on Beijing's renewed push for nuclear energy.

Beijing-headquartered China National Nuclear Power Co. (CNNP) raised 13.19 billion yuan ($2.16 billion) last week, according to a statement to the Shanghai Stock Exchange, in what state media said was the biggest initial public offering (IPO) since 2011.

Its stock price jumped the maximum allowed for new listings, 44 percent, to close at 4.88 yuan in Shanghai on Wednesday.

"The company’s IPO was hot because investors are confident of its future returns as China is now backing the development of nuclear power," Chen Xingyu, a Shanghai-based analyst with Phillip Securities Group, told AFP.

The company said in its prospectus that its net profit edged down 0.17 percent year-on-year to 2.47 billion yuan in 2014.

CNNP will use the funds raised to build 10 nuclear power units and supplement its capital, according to its prospectus.

Investors seeking to buy into the IPO offered a whopping 1.68 trillion yuan in subscription funds, the company said.

Under China's IPO system, the securities watchdog approves the number of shares to be issued and their price, meaning offers are typically underpriced and in short supply.

But one analyst warned of the risk from surging prices of new shares.

"The pursuit of new shares has entered an irrational phase," Yingda Securities analyst Li Daxiao told AFP.

"If it surges too much at the beginning, it may not be able to last long," he said.

The Shanghai market was the world's second-best performer last year, surging 52.87 percent in 2014 and has grown nearly 58 percent so far this year.