Shares of cement operator Asia Cement (China) Holdings rose 38 percent during its initial public offering (IPO) in Hong Kong yesterday, which becomes the second best IPO debut this year after New Media Group.

Boosted by the speculation of the post-earthquake reconstruction work, the shares' price once peaked at HK$7.09 yesterday.

It finally ended at HK$6.83, 38 percent higher than the offering price of HK$4.95.

Some 194 million shares were recorded in changing hands, involving HK$1.37 billion.

The rally just trailed behind New Media Group IPO in which shares rocketed 1.1 times on its debut in February.

On the sideline of the IPO ceremony, the company's chairman Hsu Shu-tong expressed surprise at the stock's better-than-expected performance. "We are satisfied with the surge. It is beyond our expectation," said Hsu.

Hsu also said the impact of the earthquake on the company was minimal. Only two local factories halted operation for two to three days.

"In contrast, the company could leverage the opportunity to participate in post-disaster reconstruction," Hsu said. To bear the corporate social responsibility, Hsu said that the company would strive to stabilize cement price in the future.

Looking ahead, he hopes the company's production capacity will increase to 20 million tons in 2011.

Asked whether the parent group Far East Group would further make other spin-off move, Hsu believes that the group is unlikely to separate other division this year.

Asia Cement issued a total of 375 million new shares to raise about HK$1.8 billion.

Patrick Shum, chief portfolio strategist at Karl Thomson Securities, said that investors speculated the stock because of its proximity to the quake-hit region.

"They (investors) believe the company business will be boosted after it undertakes the projects to rebuild the affected areas. The price is also set at the lowest end of the indicative range, so it is very attractive to them."

Despite the stellar performance, CASH Asset Management Associate Director Patrick Yiu said that the IPO market climate has yet fully recovered.

"The IPO is certainly one of the best-performed ones in the first half, but it is just an exceptional case that investors attempt to ride the recovery after the earthquake," said Yiu.

"In the short run, investors are still shying away from tapping the primary market due to the unstable market condition."

(HK Edition 05/21/2008 page2)