China United Telecommunication Corp Ltd turned out to be the star of yesterday's trading on the Shanghai Stock Exchange, with its rights issue of 1.5 billion shares being the most actively traded.

The company's brisk performance displays investor enthusiasm about the firm's expansion plans, according to analysts.

The Shanghai-listed A share company began trading its rights issue, with 175 million shares traded with a transaction value of 586 million yuan (US$70.6 million), reported Friday's China Daily.

Shares in the company rose 2.74 per cent to 3.37 yuan (40.6 US cents).

Analyst Dai Chunrong at China Securities said that the rise in China Unicom's share price allayed fears that the rights issue would dilute earnings per-share.

The company aimed to raise 4.5 billion yuan (US$542 million) via share placements to help expand its network. The shares had been issued at 3 yuan (36 US cents) each.

The share placements are the largest this year on the domestic market in terms of the amount of funds raised.

According to an earlier statement from the firm, 89 per cent of the offers were subscribed by tradable share holders, with the remaining 11 per cent being subscribed by underwriters.

Proceeds through share placements will be used to purchase shares in China Unicom BVI Co Ltd from its parent company.

The parent firm will plough all these proceeds into the construction and optimization of its CDMA (code division multiple access) networks to enhance its competitiveness.

The A share company posted a 2.33 billion yuan (US$280 million) net profit, a year-on-year rise of 6.3 per cent. Revenues for its main businesses last year reached 59.8 billion yuan (US$7.2 billion), a 31.2 per cent year-on-year increase, the company reported.

Pre-tax profits for 2003 stood at 24.8 billion yuan (US$2.98 billion), registering a growth of 7.5 per cent from 2002.

China United Telecommunications Corp Ltd also announced yesterday that Hong Kong-listed China Unicom Ltd will purchase telecommunications assets from its parent for HK$37 million (US$5 million) to aid overseas expansion.

China Unicom Ltd is indirectly controlled by China United Telecommunications Corp Ltd.

China Unicom Ltd will buy China Unicom International Ltd, a Hong Kong-incorporated unit of China United Telecommunications Corp, the A share company said. The purchase will be completed on August 11.

Unicom International is engaged in the telephone card businesses, international line leasing services, mobile virtual network services, and the wholesale voice traffic business between the United States and China, the statement said.

Source: China Daily