China, Clean Energy, Cleantech venture capital, Solar

China’s Topraysolar shares surge fivefold in debut

February 28, 2008 (Reuters) – Shares in Shenzhen Topraysolar Co, a maker of solar power cells, jumped nearly fivefold when they began trading on Thursday, riding a wave of investor interest in China’s clean energy companies.

Topraysolar, the country’s first specialist maker of solar cells to list domestically, closed at 51.62 yuan on the Shenzhen Stock Exchange, up 378 percent from their initial public offer price of 10.79 yuan, after hitting a high of 57.00 yuan.

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That comfortably beat analysts’ expectations of a price of around 45 yuan on the stock’s first day of trade.

“Unlike sluggish large-cap stocks, such small environmental firms are attracting increasing interest, partly because of the publicity that the Beijing Olympics are giving to green issues,” said Qian Xiangjing, analyst at CITIC-Kington Securities.

A number of bigger Chinese solar energy firms, such as SunTech Power and Yingli Green Energy, have in the past few years listed on U.S. stock markets, where they could benefit from the focus on environmental protection there.

But until recently, Chinese investors preferred fast-growing banking and industrial stocks. A slump in such stocks that began late last year, as well as the Chinese government’s financial support for clean energy, have begun to alter perceptions.

The change became apparent in late December, when shares in Xinjiang Goldwind Science & Technology Co, China’s biggest maker of wind power generation equipment, far exceeded expectations by soaring 264 percent on their first day.

Other Chinese clean energy shares were also pushed up by Topraysolar’s strong debut on Thursday. Goldwind climbed 3.55 percent to 76.81 yuan and Baoding Tianwei Baobian Electric, a power equipment maker involved in the solar and windpower industries, rose 3.19 percent to 55.03 yuan.

“Such shares are popular among institutions as they believe the development of the companies will get support and sympathy from the government, although small investors are a bit jittery about the relatively high share prices,” said Qian. Topraysolar raised about $60 million in its IPO, selling 25 percent of its expanded capital. The offer attracted strong demand.

Thursday’s gains left Topraysolar shares trading at 81 times 2007 earnings, compared with around 40 to 60 times for many Chinese electrical machinery firms.

The company plans to invest funds raised in the IPO in expanding production. It earned a net profit of 76.29 million yuan ($10.7 million) in 2007, up 13 percent from 2006.

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