Sinovel stock plummets on IPO launch

CHINA: Sinovel, China’s largest wind turbine manufacturer, has seen its stock prices drop by 9.59% on the first day of its IPO on the Shanghai Stock Exchange.

Sinovel wants to use the IPO to raise development funds for turbines such as its 3MW model
Sinovel wants to use the IPO to raise development funds for turbines such as its 3MW model

Sinovel plans to raise CNY9.459 billion ($1.43 billion) through issuing 105.1 million shares on the stock market, 10.46% of its total.

The issue price is CNY90 ($13.60), a record high in the Shanghai Stock Exchange over the past two decades. The corresponding price earning ratio (PER) is 48.83 times.

The stocks traded today involve 84.1 million shares that are subscribed online. The remaining 21 million shares, subscribed offline, will be locked for three months before trading.

Sinovel stocks rose slightly to CNY88.8/share for a period after the stock market opened. Soon afterwards, they fell to CNY85/share and closed at CNY81.37/share.

Industry officials said Sinovel stocks sank below the offer price largely as a result of market fears about the quality of Sinovel turbines.

Earlier this month, three workers earlier this month were killed by electric shock while installing a Sinovel turbine. The incident occurred in north China’s Hebei Province.

Sinovel said it was waiting for the investigation result from the government, but the incident had nothing to do with the quality of the turbine.

Sinovel, the world’s third largest in 2009, said it planned to invest the collected funds to develop 3MW and larger wind turbines, 3MW offshore and onshore wind turbine production facilities, and offshore wind turbine assembly and transportation bases.

According to China Wind Energy Association (CWEA), Sinovel had 20.57% of the Chinese market share in 2007, 22.45% in 2008, and 25.32% in 2009.

In 2008, Sinovel replaced Goldwind as the largest wind turbine maker in China and seventh largest in the world, with 14GW turbines installed in the year. In 2009, Sinovel had 35GW turbines installed.

Sinovel won 60% of China’s first 1GW offshore concession project in east China’s Jiangsu Province last October.

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