Chinese Energy IPO: Prepare for the Stampede

Based on the extraordinary runup in both Chinese equities and energy prices this year, anticipate a frenzy of activity surrounding Shanghai's enormous IPO on Oct. 9 for China Shenhua Energy. The company has a broad array of businesses from power plants and mines to railroads, but its strength is derived from its coal business. As a result of China's insatiable appetite for energy and lack of nuclear power, coal is the country's bloodline.

 As always, when dealing with Chinese equities, you want to bet WITH the state-owned entities and not with private companies that have to compete with government-cozy competitors. Shenhau's parent owns over 80% of the company and is state owned.

If another Chinese coal stock traded on the US exchanges, Yanzhoe Coal Mining (YZC) is any indication, this one should do well. YZC is up over 150% YTD.

The Hong Kong IPO had already garnered $9 billion, exceeding any other Chinese IPO of the year. Now, it will trade on the Shanghai exchange. Based on the info I have, the ticker will be: CSEC.

Disclosure: I'm currently long FMCN, BIDU and CHL, all from China. Without looking to become too heavily weighted in China, I may consider an opening day jaunt into the IPO. Based on recent IPOs from China, there IS still money to be made after opening day; it's not only for insiders like say, the Blackstone IPO (BX) in the US this year.

Comments

[Vinson]

Is China Shenhua Energy the same ticker as CUAEF? this symbol is a pink sheet security, and isn't an IPO. Maybe it isn't traded in a US exchange yet, but I'm wondering if CUAEF is the same company.

[User 114708]

Dan, sorry I'm new to this, but when this IPOs on the Shanghai exchange, that still doesn't mean we can buy it easily over here in the US right?