By SHEN HONG
SHANGHAI-China Postal Express & Logistics Co. plans to raise 9.98 billion yuan ($1.59 billion) in what could be the biggest initial public offering in China this year, joining a growing list of state-run firms eager to tap a slowly recovering domestic stock market.
The proposed share sale by the Beijing-based logistics company, a unit of state-owned China Post Group, also comes as China's securities regulator has stepped up its rhetoric on reforming the country's notoriously cumbersome IPO approval system and a malfunctioning pricing mechanism that often leads to overly high valuations and volatile trading in new listings.
China Postal Express & Logistics aims to sell up to four billion new shares, or 33% of its enlarged capital, ahead of a listing on the Shanghai Stock Exchange, it said in a preliminary prospectus posted on the China Securities Regulatory Commission's website.
It will use the proceeds from the offering to pay for the expansion of its distributing centers and warehousing facilities, building the information system as well as purchasing transport facilities, the company said.
Citic Securities Co. is the underwriter of the deal.
The logistics firm made a net profit of 901.7 million yuan, or 0.11 yuan per share, last year, with revenue totaling 25.88 billion yuan.
In a separate statement, the securities regulator said it will review the company's IPO application May 4.
If approved, the company's IPO will be the biggest in the country so far this year, topping China Communication Construction's 5 billion yuan listing in February as well as the planned but yet-to-be-approved 6.06 billion yuan offering by Huaibei Mining Co.
Huaibei Mining, a state-owned coal miner based in the eastern Anhui province, said Tuesday it aims to sell up to 2.20 billion new shares, or 24.6% of its enlarged capital, ahead of a listing in Shanghai.
On the same day of Huaibei Mining's announcement, Golden Dragon Precise Copper Tube Group Inc., a copper tube manufacturer, said it also targets to raise 3.50 billion yuan in an IPO.
The somewhat quickening pace of IPOs comes amid signs of a gradually recuperating Chinese stock market as expectations are growing that a weaker economy may prompt the authorities to ease monetary policy further and that Beijing is keen to see investor mood improve ahead of a landmark leadership transition in the autumn.
The benchmark Shanghai Composite Index has gained 9% so far this year, after dropping 22% in 2011.
"More firms have been launching big IPOs recently in order to ride on the improving investor mood," said Jacky Zhang, an analyst with Capital Securities.
The better climate for IPOs was evident in the surprisingly robust debut of People.cn Co., the website of the China Communist Party newspaper the People's Daily, on the Shanghai bourse Friday.
People.cn's shares ended its first trading day at 34.72 yuan, off its intraday high of 35.60 yuan, but up 74% from its IPO price of 20 yuan.
That was in stark contrast to earlier this year when a depressed secondary market forced China Communications Construction, a port machinery manufacturer, to cut the size of its IPO to CNY5 billion from its originally planned 20 billion yuan.
Statistics from data provider Dealogic show that Chinese firms raised $5.3 billion via domestic IPOs in the first quarter of this year, down more than 60% from a year ago. They raised more than $41 billion last year.
Write to Shen Hong at hong.shen@dowjones.com
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