Due to the sluggish markets in both Shanghai and Hong Kong, plus the promise that its IPO price of H-share will be no less than the initial offering price of its A-share, the company sees little possibility to complete its H-share IPO prior the deadline of 14 September 2008. Insiders told reporters that preparation for the IPO of its H-shares had already been suspended . Without considering the discount rate between A-shares and H-shares, its H-shares must be issued at HKD 33 per share at the minimum, based on the IPO price of RMB 30 for its A-shares. As there is only two months remaining prior to the deadline and its A-shares closed at RMB 20.44 per share on 14 July 2008, the planned IPO of its H-share will not be possible if the company wishes to keep its promise. Consequently, an insurance analyst told reporters that it is unlikely for the company to break its promise as insurance companies rely on their creditability to generate business.

After falling below its IPO price on 26 March 2008, its A-shares has stayed low. During this period, institutions and individual investors were cold to its brilliant 1Q 2008 Report.

If it misses the deadline of 14 September, the company will have to go through the entire H-share IPO application procedure again, including to obtain another approval from its board of directors and the China Securities Regulatory Commission. Insiders said the company might consider changing its previous promise when applying for the H-share IPO this time.

Source: Shanghai Securities News

Date: 15 Jul 2008

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