Shares of China Shenhua Energy surged 87.35 per cent on their mainland trading debut yesterday but the company's chairman said the performance was disappointing, in a sign that the market is losing its grip on reality.
'The debut price was within expectations,' said Chen Biting. 'But I am still a wee bit disappointed.'
The mainland's biggest coal producer, which raised 66.58 billion yuan in the largest A-share initial public offering, closed at 69.30 yuan in Shanghai.
The rally topped analysts' boldest predictions, with securities firm CICC expecting the shares to trade at just 68 yuan at their highest.
Shenhua's Hong Kong shares slipped 0.33 per cent yesterday to close at HK$45.65, a discount of 43.4 per cent to the A shares.
'The A shares are overpriced,' said Guotai Junan Securities analyst Shen Shi. 'The higher price on the mainland was just a result of excessive liquidity [in the market].'
Based on yesterday's A-share closing price, Shenhua is trading at 66 times this year's forecast earnings. Global coal miners Xstrata trades at 11 times and BHP Billiton 15 times, according to Reuters.
