Photo:VCG

Beijing-Shanghai High-Speed Railway Co (BSHSR), a unit of the state-owned China Railway Corp, on Friday priced its initial public offering (IPO) at 4.88 yuan ($0.7) per share. 

Book building for the IPO will start on Monday. It will be the first time investors are able to purchase shares in the world's largest railway network.

The firm plans to sell around 6.29 billion new shares in a bid to raise more than 30 billion yuan through its listing in the Shanghai bourse, according to a filing released on Friday. The IPO price corresponds to the price to earnings ratio - 23.39 times - lower than the average price to earnings ratio of the transportation industry's major listed firms. 

The route between Beijing, the country's political center, and Shanghai, its financial hub, has been one of China's most profitable rail lines. Corporate revenues reported consecutive growth from 2016-18, and reached 25 billion yuan in the first nine months of 2019, according to BSHSR.

A Fuxing bullet train prepares to leave the railway station in Shanghai, April 10, 2018, on its way to Beijing. (Photo: China News Service/Yin Liqin)

BSHSR's listing is of "great significance" in the process of China's railway reform as it helps diversify ownership, optimize capital structure and advance the high-quality growth of the railway sector, Wu Hao, a Shenzhen-based industry analyst, told the Global Times on Friday. 

Wu noted that it would also help expand capital and the efficient development of the railway transportation business, and that it would improve the economic and social benefits to the country.

It would be conducive to building a world-class high-speed railway, benchmarking enterprise with high safety, efficiency and service quality, said Wu.

China's high-speed railway network, which hit 35,000 kilometers at the end of 2019, accounts for 70 percent of the global rail network, the Xinhua News Agency reported. 

Compared with global railway companies, Chinese rail firms have more growth potential thanks to high domestic demand from the country's large population, Li Daxiao, chief economist at Shenzhen-based Yingda Securities, told the Global Times on Friday.

Li said the IPO price is relatively normal and hopes that it would not be over-hyped in the market.
Newspaper headline: Beijing-Shanghai high-speed railway IPO 70 cents a share