Dear clients
We have gathered some information from a contact in china on the upcoming IPO: the international offering (H share) is already 8x covered and the local tranche (A Share) is 16x covered.
1. Hearing it is getting surprisingly hot, expecting 5-10% for first day trading, Reasons being:
2. ABC's IPO is rather a political deal than a normal market IPO deal;
3. ABC will buy back shares on market if price drops below listing price on first day trading;
4. ABC is cash rich;
5. As every PM said, when you buy stock you buy the future,that's right,ABC has great future in rural area's financial market;
6. China gov't is seeking a well balance national development, I greatly doubt gov't may launch new project in rural area after ABC's IPO in 2H10.
7. Current market has low valuation in banking sector. ABC is coming at a discount to its peers.
Books will close on the 6th of July.
Initial Price Range: HK$ 2.88 - HK$ 3.48
This initial price range represents the following
? PB of 1.53x - 1.76x 2010
? PE of 9.2x - 11.1x 2010
To compare:
ICBC and CCB (main comps) are trading at PB of 2.15x - 2.25x and PE of 10.5x to 11x 2010.
The deal has already attracted 11 cornerstones with a total commitment of $5.45 Billion.
? Qatar Investment Authority $2.8BN
? Kuwait Investment Authority $800M
? Standard Chartered Bank $500m
? Rabobank $250m
? Seven Group $250m
? China Resources Holding $200M
? Temasek Holdings $200M
? China Travel Services $150M
? ADM $100M
? UOB $100M
? Li Ka-Shing $100M
About the Bank:
Agriculture Bank of China (ABC) is the third largest bank in China in terms of deposits (market share 12.3%) and loans (9.7%). It has the worlds largest retail consumer base of 320m, (followed by ICB at 220M) and 2.6M corporate accounts, according to company date. ABC has the largest domestic distribution network in China with 23,624 domestic branch outlets and 41,011 ATMs.
ABC is uniquely positioned to capitalize on the next wave of china's growth, driven by the urbanization and economic transformation of county areas. It is estimated that around 15-20m people will be added to China's urban population each year and 4-5 mid sized cities with population of 1-5m will be formed.
ABC is the primary financial services provider in the county areas in terms of deposits (market share: 21.6% in 2008), loans (13.6% in 2008) and domestic branch outlets of 10,887 according to company data. (Income Statement Attched)
Source: Lead managers research
About the offering:
GLOBAL OFFERING OF 25,411,765,000 H SHARES
(subject to the H share Over-Allotment Option) ON THE MAIN BOARD OF THE STOCK
EXCHANGE OF HONG KONG
JGCs : CICC/GS/MS/ABCI
JBRs/JLMs : CICC/GS/MS/DB/JPM/MACQ/ABCI
Issuer : AGRICULTURAL BANK OF CHINA LIMITED
Type of Offering : Global Offering on the Main Board of the Stock Exchange of
Hong Kong ("SEHK")
Distribution : Regulation S and Rule 144A
Initial Price Range : HK$ 2.88 - HK$ 3.48
Base Offering Size : 25,411,765,000 H shares (US$ 9.4 – 11.4 bn), representing
approx. 8.0% of the enlarged share capital of the Company
Greenshoe : 3,811,764,000, representing 15% of the Base Offering Size
Post-Greenshoe Size : 29,223,529,000 H shares (US$ 10.8 -13.1 bn), representing
approx. 9.0% of the enlarged share capital of the Company
Offering Structure : 100% Primary Shares
Exchange / Ticker : SEHK / 1288 HK
Board Lot : 1000 shares
HKPO Claw Back Structure: Below 15 times, 5% of the base offering
15-50 times, 7.5% of the base offering
50-100 times, 10% of the base offering
100 times above, 20% of the base offering
Book Open Date : Thursday June 24 2010
Expected Book Close Date : Tuesday July 6 2010 (Exact book closing date and
time will be notified by JBRs later)
HKPO Period : From June 30 to 12:00 noon on Tuesday July 6
Expected Pricing Date : Tuesday July 6 2010 (Hong Kong time)
Expected Listing Date : Friday July 16 2010 (Hong Kong time)
Expected Settlement Date : Friday July 16 2010 (Hong Kong time)
--
Rgd's
Kushal Shah
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