BOE preps A-share issue

BOE Technology Group Co, a leading liquid crystal display (LCD) maker in China, plans to raise up to 46 billion yuan ($7.5 billion) in a private placement plan announced Thursday, making it the largest equity offering so far this year in the A-share market.

The company will offer 9.5 to 22.4 billion shares with an issue price of 2.1 yuan per share in the private placement, and the money raised will be used to invest in LCD and touch screen projects, the company said in a filing on the Shenzhen Stock Exchange Thursday.

On July 15, BOE said in a profit forecast that it expects to report up to 860 million yuan of net profit in the first half of this year, compared with net losses of over 780 million yuan in the same period of 2012.

"Improved performance can boost investors' confidence … but it will still be difficult for BOE to raise that much money, given the current sluggish capital market," said Li Ling, an analyst at ChinaVenture Investment Consulting Ltd.

Li told the Global Times Thursday that some companies have had to downsize their equity offerings this year given the market conditions.

One typical example is IT firm San'an Optoelectronics Co, whose equity offering has been cut from 8 billion yuan to 3.3 billion yuan.

New IPOs on the A-share market have been halted for nearly nine months, and some analysts have said that the recent equity offerings could be a trailblazer for the IPO restart in that if the market reacts well to the equity offerings, an IPO restart may be around the corner.

But Li said that unlike IPOs, private placement is targeted at institutional investors, so a good reaction to equity offerings does not necessarily mean good timing for the IPO restart.

BOE's refinancing plan has been supported by three local ­government-­owned companies that have agreed to buy 20.83 billion yuan worth of shares, the company said.

One of BOE's LCD panel projects was run through a BOE joint venture in Southwest China's Chongqing Municipality and a touch screen project was invested through the company's joint venture in Hefei, capital of East China's Anhui Province.

Though the two joint ventures are still losing money at present, BOE is very bullish on the projects, citing surging demand in the two sectors.

Wang Jun, an analyst at consultancy Analysys International, told the Global Times that although BOE has started to compete with leading international panel companies such as Sharp and Samsung, it still needs to boost research investment to narrow the distance with leading firms.

"The touch screen project could also mean huge profit for BOE as demand grows further," said Wang.