LINE

Text:AAAPrint
Economy

Chinese companies finding credibility abroad(2)

1
2015-08-10 09:09China Daily Editor: Si Huan

This is very different from China's domestic stock markets, which are dominated by retail investors who make decisions less rationally and tend to make more trades on a short-term basis, with their decisions greatly influenced by market sentiment as opposed to company fundamentals.

"From the perspective of a quality company, as they steadily grow and they meet investor expectations, their share price should rise steadily as more investors buy into their stocks over the long term," Woolf said.

"Overall, China has good, valuable and growing companies, and IPOs of these should be possible in London," said Ken Rumph, CEO of the consulting firm Clean Technics.

Rumph said successful Chinese companies listed in London generally would work to attract and maintain a wide group of institutional investors, as the work does not stop at the IPO.

He said one example of a Chinese firm that has achieved great benefit by listing in London is ReneSola Ltd, one of the world's leading solar photovoltaic manufacturers.

It initially started trading on the LSE's AIM in March 2006, raising $50 million followed by a further $120 million soon after.

"ReneSola then raised more money in New York and eventually delisted in London but remains listed in New York. Although its share price has followed the same roller coaster ride as other solar stocks, investors in the IPO had the opportunity to make significant profits during the boom years," Rumph said.

Su, of GTS, added that strong growth of a Chinese company's share price will be achieved after the company takes the time to prove to shareholders that its revenue will achieve forecasts and the company keeps its promise to pay dividends, as has been demonstrated by GTS Chemical Holdings.

"Our key advantage is that the company's revenue has experienced a strong growth, that we have strong corporate governance and transparency, we have good communications with investors, and that we have kept our promise of dividend to them," Su said.

According to the company's annual report, sales in 2014 reached 704.6 million yuan ($113.5 million), a 45.9 percent growth from 482.9 million yuan in 2013.

Su said the decision to list in London was due to the exchange's strict corporate governance requirements. This has helped GTS to build up brand reputation and trust with its distributors.

"In the lubricating oil sector especially, having a foreign listing really helps to send out the signal that we are a reputable company, and we have seen this effect since our IPO," Su said.

GTS also used the listing process as an opportunity to strengthen its corporate governance to a much higher standard. It has created a board of directors, of which four are non-executive directors, with three from a financial background, so that they could ensure the company's financial statements are prepared to the highest standards.

"Our board of directors would have meetings every month, so there is absolute transparency between us. We also keep our non-executive directors informed of the latest updates in the company, so that they can communicate our message to investors very accurately," Su said.

The company announced its intention to pay a dividend to shareholders at the time of listing, which it has confirmed this year. The company intends the dividend to be about 5 percent of the price at which its shares were placed when it listed, so, as the shares were placed at 36 pence that implies a payout of around 1.8 pence.

"The fact that we have kept our promise boosted investors' confidence in us," Su said.

At the time of IPO, GTS Chemical Holdings raised 3.23 million pounds. Su said this was below the company's forecasts, although in the future his managers may consider secondary fundraising when the time is right.

Su said he believes Chinese companies listed on overseas exchanges would continue to be attractive in the long term because they enable Western investors access to China's high economic growth.

"Although the Chinese economy is slowing, its growth is still rapid compared to many Western economies, so the China story will still be attractive to Western investors. From the company perspective, we just have to make sure that we communicate our message well," he said.

  

Related news

MorePhoto

Most popular in 24h

MoreTop news

MoreVideo

News
Politics
Business
Society
Culture
Military
Sci-tech
Entertainment
Sports
Odd
Features
Biz
Economy
Travel
Travel News
Travel Types
Events
Food
Hotel
Bar & Club
Architecture
Gallery
Photo
CNS Photo
Video
Video
Learning Chinese
Learn About China
Social Chinese
Business Chinese
Buzz Words
Bilingual
Resources
ECNS Wire
Special Coverage
Infographics
Voices
LINE
Back to top Links | About Us | Jobs | Contact Us | Privacy Policy
Copyright ©1999-2018 Chinanews.com. All rights reserved.
Reproduction in whole or in part without permission is prohibited.