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Share price quadruples on Shenzhen bourse -- Frenzy of interest in IPO of China's leading wind turbine supplier

Goldwind, China's leading wind turbine manufacturer, raised CNY 1.8 billion ($250.26 million) in its recent listing on the Shenzhen Stock Exchange in a frenzy of trading which saw share prices quadruple in value. The injection of funds allows Goldwind to diversify into wind project development, expand its manufacturing operations and further invest in research and marketing, says the company.

In its initial public offering (IPO), the company sold 50 million shares priced at CNY 36 ($5) each, surpassing the expectations of even the most optimistic market analysts. Trade in Goldwind shares broke stock market records, opening at CNY 138 ($19.19) a share, the highest debut price seen on either of China's two A-share bourses. At one point on the opening day, December 26, the share price peaked at CNY 160 ($22.25), prompting the Shenzhen exchange regulator to halt trading of them for 15 minutes. They ended the day at CNY 131 ($18.22), comfortably beating analysts' predictions, which ranged from CNY 80-100 ($11.13-13.90), and up around 264% on the IPO price.

Analysts said the high prices, while in step with a rebounding market just recovering from a big margin downslide, was an indication that renewable energy, especially wind power, is gaining popularity among Chinese investors. "Goldwind is one of the most promising enterprises. It has made outstanding contribution in promoting wind power in China," says Shen Degao of Haitong Securities, based in Shanghai, which handled the listing for the turbine manufacturer.

Goldwind has consistently reported growth rates of over 100% for both revenues and profits in seven straight years starting from 2000, a rare feat among China's companies. Revenues reached CNY 1.53 billion ($212.8 million) and net profits CNY 319 million ($44.36 million) in 2006, a year in which Goldwind supplied 33.3% of China's new wind capacity and 2.8% of the world total for new capacity installed. Following the listing, the China-Belgium Direct Equity Investment Fund, a venture between Haitong Securities and Belgium's Fortis Fund Management -- one of the ten leading shareholders in Goldwind -- vowed to hold its 7.2% stake in the firm for at least three years.

Internationalising

To date Goldwind's turbine range is made up of 600 kW, 750 kW and 1.2 MW units under licence agreements and it has developed a 1.5 MW direct drive turbine in co-operation with Germany's Vensys. The company now says it wants to design and produce 2.5 MW, 3 MW and 5 MW machines in the near future. It is also keen to diversify into offering complete wind farm solutions and it plans to investigate opportunities overseas

Goldwind aspires to become a "first-class" global wind power equipment manufacturer, says company boss Wu Gang. An important goal over the next ten years is to become internationalized, he says, with products sold abroad bearing the Goldwind brand name and the company managed to international standards, particularly with regard to recruiting talent and raising funds worldwide.

Commenting on the overwhelming interest in Goldwind shares, Wu said at the time: "We hope investors stay calm. The company wishes to develop steadily and we do not wish to see the stock price fluctuate too much and lead investors to losses." To date, Goldwind shares have stayed high. According to analysts at Oriental Securities, a fair price is CNY 120 ($16.69). Beyond that, the stock is overvalued, they caution.

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