Privately funded Zhejiang NHU Co Ltd announced the first initial public offering (IPO) on the country's new board for small start-ups shortly after its official launch Thursday.

The IPO was announced hot on the heels of the grand inauguration ceremony to launch Shenzhen Stock Exchange's small and medium-sized enterprise (SME) board Thursday afternoon.

Officials from the central, provincial and municipal governments rubbed shoulders at the ceremony with leading securities regulatory officials.

Zhejiang NHU Co Ltd, based in east China's Zhejiang Province, will issue 30 million shares. With an issue price of 13.41 yuan (US$1.62) per share, the stock bears a price/earning ratio of 16.35.

The flotation is expected to raise 400 million yuan (US$48.4 million). The proceeds will be used to support its business expansion and technological upgrading, according to the company's prospectus.

The high-tech firm, with total assets of 1 billion yuan (US$120.8 million), produces a wide range of products including medicine, health-care products, flavorings and food additives.

Its annual sales could reach more than 1 billion yuan, the company said on its website.

National People's Congress Standing Committee Vice-Chairman Cheng Siwei told the ceremony that guaranteeing the quality of the firms on the new board and strict supervision of them must be a top priority.

"The listed companies should ensure the consistency, timeliness and accuracy of their financial reports, while the stock exchange has the responsibility to create a fair, open and just market," Cheng noted.

Securities watchdog China Securities Regulatory Commission Chairman Shang Fulin said the board will be open to growing SMEs with outstanding main business or innovative high-tech start-ups.

The monitoring and supervision system will be extremely strict to enhance the new board's control function in order to ensure its smooth operation, Shang added.

The commission announced its long-awaited decision of the launch of the SME board, a de facto embedded subordinate of the main board of Shenzhen Stock Exchange, last Monday, paving the way for a completely independent NASDAQ-style market in the future.

Zhejiang NHU's IPO will be the first on the bourse since late 2000, when it was ordered to stop hosting IPOs and surrender this right to the country's other bourse, the Shanghai Stock Exchange, as part of preparations for the NASDAQ-like second board.

The SME board will run rather independently with its own index, trade code and supervisory system.

But companies that want to get listed on the new board will face the same listing requirements demanded by the main Shanghai and Shenzhen exchanges. For example, entrants are required to show a three-year profit record.

Chinese officials said more than 1,000 companies hungry for funds have joined the IPO queue, helping the dynamic southern boomtown of Shenzhen revive its flagging financial fortunes, after being overshadowed by Shanghai in recent years.

It was reported that the commission has accelerated the approval for the qualified companies for listing of nearly 50 SMEs which are poised to float less than 50 million publicly traded shares each, which offers good choices for the new board.

Experts forecast in an interview with China Daily that several companies, each with less than 50 million publicly traded shares, may get listed at the same time to mitigate the possible risk that a single one may attract too much capital.

The exchange is expected to debut 10 stocks - each with fewer than 50 million publicly traded shares - in early June.

(China Daily May 28, 2004)