By Amy Lam (China Daily)
Updated: 2007-12-15 10:20

Shares in Anton Oilfield Services Group, a private oilfield service provider, plunged 13.3 percent in its trading debut in Hong Kong.

The company's shares opened 5.3 percent lower than its offer price of HK$1.88 and dropped further to close at HK$1.63, losing 13.3 percent. Turnover was HK$220 million.

It was the second-worst first-day performer in Hong Kong this year after Sinotruk, which shed 15.6 percent in its trading debut.

Luo Lin, chairman of Anton Oilfield Services, said the stock was affected by recent volatility in the overall market. But he was positive about the long-term prospects of the industry, given the strong demand for oil. He said oil prices would not greatly affect the company's results.

Kenny Tang, associate director of Tung Tai Securities, said the private company was at a disadvantage competing against the industry's State-owned firms.

"The industry is dominated by State-owned providers," said Tang. "The utilization rate of companies like China Oilfield Services Ltd is almost 100 percent as they have secured contracts with their parent firms. The scale is the most important in a capital-intensive industry like this."

Tang said investors should continue to favor industry leaders or State-owned firms in new share offerings.

Anton Oilfield Service priced its 520 million new shares at HK$1.88, close to the lower end of the indicative range of HK$1.8 to HK$2.4. The shares were about 15 times subscribed. Credit Suisse and JPMorgan arranged the deal.

There are more than 1,200 private oilfield services providers on the mainland that share about 10 percent of the market, according to a Peking University report commissioned by the company.

Anton Oilfield Services provides high-end oilfield services and products for wells, drilling and production. Based on its 2006 revenue, it had a share of about 1.2 percent of the fragmented non-State-owned market.

A significant portion of the company's income is derived from non-exclusive contracts with three major State-owned oil companies including CNPC, Sinopec and CNOOC.

The company posted a net profit of 76.7 million yuan for 2006 and first-half net earnings of 42.4 million yuan for this year.

The Hong Kong market has been volatile as subprime woes continue. The blue-chip Hang Seng Index lost 180.81 points or 0.65 percent to close at 27563.641 points on Friday, dragged down by financial stocks.