Investment Updates News
- Dongfang Electrical soars on asset injection
Date: 6-Feb-2007 Sources: (Shenzhen Daily)
SHARES of Shanghai and Hong Kong-listed Dongfang Electrical Machinery Co. soared yesterday on news its parent will inject more than US$1.5 billion of core assets into the company.
Dongfang, a top domestic power generator maker, said late Friday it would issue 3.67 billion A shares worth 8.9 billion yuan (US$1.14 billion) to its parent and pay the remainder, about 3 billion yuan, in cash, in exchange for the latter's stakes in two companies.
Dongfang would buy a 68.05 percent stake in Shanghai-listed Dongfang Boiler Group Co. and all of Dongfang Turbine, a move which would effectively list all core assets of its parent, Dongfang Electric Corp., through Dongfang Electrical Machinery.
'The acquisition of the turbine and boiler businesses, along with Dongfang Electrical's existing generator business, will transform the company into an integrated power equipment manufacturer with a similar structure to that of its peers,'Morgan Stanley analysts said in a research note yesterday.
Dongfang Electrical competes with domestic power gear makers Harbin Power Equipment Co. and Shanghai Electric, whose Hong Kong-listed shares have risen in the past few months partly due to optimism over demand outlook in the world's second-largest electricity market.
Dongfang Electrical's Shanghai-listed A shares jumped their 10 percent daily limit up to 29.81 yuan yesterday when they resumed trading following a suspension since December 20.
'The listing of the entire Dongfang group would greatly help the group to increase production, expand overseas and turn it into a large power equipment maker with international competitiveness,'the Shanghai Securities News said in a report.
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