Another giant will land in the Hong Kong stock market. On August 7, China Tower issued an announcement of the offer price and the results of the placement. The net proceeds raised were approximately HK$53.42 billion and will be officially traded at 9:00 am on August 8.
The "Securities Daily" reporter noted that this will be the highest IPO in the Hong Kong stock market since the beginning of this year, more than the HK$24 billion previously raised by Xiaomi.
According to the announcement, the issue is priced at a low price of 1.26 Hong Kong dollars per share in the IPO range, with 43.114 billion shares issued. Currently, the public offering has been oversubscribed by 1.36 times. Among them, the Hong Kong public offering issued 2.155 billion shares and the international offering of 40.959 billion shares.
At present, China Tower has introduced cornerstone investors including Taobao China and PetroChina, which have subscribed for 622 million shares respectively. In addition, it also includes Gaochun Fund, OZ Fund, Darsana Master Fund LP, Invus Public Equities, LP. Beijing, Haidian State-owned Assets, ICBC Wealth Management, Hualong (Hong Kong), SAIC and Hong Kong and other cornerstone investors all subscribed for approximately US$1,423.5 million.
However, in the eyes of the industry, the China Tower's IPO is only 1.36 times oversubscribed, which is not too good, which may be related to its large size. Qi Zhiyong, a senior strategist at Hong Kong's South China Financial Group, told the Securities Daily reporter that "Since the China Tower is a solo business and a leader in the industry, it looks good from the long-term; but in the short-term, because the price-earnings ratio is too high, the market value is large, It may not be able to rise."
According to the data, the China Tower was established in 2014. It is a product of the country's emulation of foreign communication facilities, and the implementation of telecommunications reform. It was initiated by the three major operators of China Mobile, China Unicom and China Telecom. The new shareholders were introduced in 2015. China's new country. At present, China Mobile holds 38%, China Unicom holds 28.1%, China Telecom holds 27.9%, and China National holds 6%.
According to the Sullivan Report, as of 2017, China Tower's market share in the China Telecom Tower Infrastructure Market was 96.3%. In terms of revenue, the market share is 97.3%. The prospectus also shows that the current tower business is still the main source of income for China Tower, with revenue of 67 billion yuan in 2017, accounting for 97.69% of total revenue.
The three major shareholders of China Tower are also their main customers. Among them, China Mobile is currently its largest customer, with revenue accounting for 53.6% in 2017, China Unicom accounting for 23.7%, China Telecom accounting for 22.5%, and other customers accounting for only 0.2%.
Xiang Ligang, a senior analyst in the telecommunications industry, told the Securities Daily that the country’s integration of the three major operators’ towers was shared to reduce the cost of the tower construction to reduce costs. For the tower company, the basic business is very stable, behind the support of three major operators, the income is guaranteed, the return is relatively stable, the risk is relatively low, but there will be no explosive growth. Following the development of 5G, it is expected that there will be a relatively large-scale base station construction in 2019, and there will be certain industrial development opportunities for the China Railway Tower.
It is worth noting that China Tower is currently highly indebted. Some people believe that the China Tower is eager to go public at this time, or raise funds to repay short-term debt.
The "Securities Daily" reporter noted that as of the first quarter of 2018, China Tower's liabilities accumulated 126.4 billion yuan, net current liabilities reached 147 billion yuan; and the net cash generated from operating activities was only 5.791 billion yuan.
Xiang Ligang told the "Securities Daily" reporter that the large-scale base station construction capital investment is large, but the investment return needs a certain number of years, the Chinese tower debt or mainly due to the construction of the base station, and the raised funds for the next 5G large-scale base station construction is A big source of funding.
According to the China Tower Prospectus, 60% of the proceeds from the listing are used for capital expenditures, including site construction and sharing renovation, and upgrading of supporting facilities. It is expected to be used up by the end of 2019; 30% is used to repay bank loans, annual interest rate. Between 4.35% and 4.75%, due from 2018 to 2020; 10% for working capital and other general corporate purposes.
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