Xiamen Bank Plans to Raise RMB1.77bn through Shanghai IPO

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Xiamen Bank disclosed its prospectus for its upcoming debut on the Shanghai Stock Exchange (SSE), planning to issue 264m A-shares at a price of RMB6.71 per share and raise around RMB1.771bn, as reported by The Paper on September 15. The bank, which passed CSRC’s IPO hearing on July 16, will start its share subscription on October 13. Notably, the public offering subscription date is three weeks later the original schedule due to the bank’s higher-than-average price-to-earnings (PE) ratio. Specifically, even diluted by the newly issued shares, the PE ratio of Xiamen Bank will still hit 9.32 times, significantly higher than the average of banking peers at 6.05 times, posing risks to investors if the stock price falls.

Xiamen Bank recorded RMB2.71bn worth of operating revenue in 1H20, increasing 29.8% YoY, with a net profit of RMB968m, up 18.3% YoY. Meanwhile, its non-performing loan (NPL) ratio declined from 1.18% as of the year-end 2019 to 1.12% by this June. Despite the satisfactory performances, CSRC still pointed out some issues related to the bank’s operations. For example, Xiamen Bank mostly granted its loans to the manufacturing, wholesale and retail, and real estate sector. In addition, it is now involved as a plaintiff in cases worth over RMB2.8bn.

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