Datang Power soars in Shanghai debut

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SHARES in Datang International Power Generation Co. soared 70.81 percent in their Shanghai listing yesterday, exceeding expectations and underlining investors’ hunger for fresh blue-chip stocks. Datang , one of China’s top electricity generators, rose as high as 11.98 yuan in early trade from its domestic initial public offering (IPO) price of 6.68 yuan. It closed the day at 11.41 yuan, up 70.81 percent. The jump exceeded the predictions of most local analysts, who had forecast the A shares would close the day between about 8 and 8.8 yuan. It also left Datang overvalued against most peers. The share price of 11.41 yuan was about 23 times estimated 2006 earnings, against 19 times for another top Shanghai-listed power firm, Yangtze Electric Power. But analysts said bullish investors, who have driven the benchmark stock index up over 100 percent this year, were eager to buy in to Datang because it was seen as a potential leader of power sector stocks. “The stock certainly seems overvalued — it’s way above what people were expecting. But investors are keen to buy blue chips wherever they can find them,” said Xu Yinghui, analyst at Guotai Junan Securities. Heavily weighted blue chips have led the stock market up in recent months, partly because investors believe they will be sought as components of the stock index futures, which the government plans to introduce early next year