Public offering frenzy returns after holidays
By Lillian Liu (China Daily)
Updated: 2006-03-16 05:56

HONG KONG: Two State-owned mainland companies are marketing their initial public offerings (IPO) worth a total of HK$430 million (US$55 million) in Hong Kong, resuming a listing spree that was interrupted by the Spring Festival.

China National Building Materials Co Ltd (CNBM), China's largest building materials supplier, said it hoped the Hong Kong share sale would bring in more than HK$230 million.

The Beijing-based firm, starting from Monday, is offering 654.214 million shares, or 33 per cent of its enlarged share capital, at a range of between HK$2.3 (29 US cents) and HK$2.75 (35 US cents) each.

Investing in cement, lightweight building materials and engineering services, the company said earlier that 40 per cent of the money raised from the IPO, or about 720 million yuan (US$90 million), will be used to cut debts.

"Our net gearing ratio as of September last year was 101 per cent. We expect that to fall after the IPO," Cao Jianglin, CNBM's president told reporters.

Morgan Stanley, which is handling the deal, said heavy capital spending led CNBM's debt ratio to increase to over 130 per cent by the end of 2005.

The rest of the IPO proceeds will be used to improve the company's turnover.

Hunan Nonferrous Metals Holding Group has also started marketing its HK$200 million Hong Kong IPO, and hopes to kick off an offering for retail investors from today.

Based in Central China's Hunan Province and regarded as a top nonferrous metals producer, Hunan Nonferrous Metals is offering 1.1 billion shares, or 33 per cent of its enlarge share capital.

It expects to start trading its shares on March 30, sources said.

The company is rich in tungsten reserves, a minor metal indispensable for hardening steel, accounting for 15 per cent of the world's total known reserves.

Bank of China International and Morgan Stanley are sponsoring the offering.

"The listing spree has emerged again," said Andes Cheng, associated director of China South Research Ltd. "More and more mainland firms will join in."

Tianjin Port Development Holdings, a subsidiary of Tianjin Development Holdings Ltd, was granted approval last week to list in Hong Kong via an IPO expected to raise US$70 to US$80 million.

Other candidates include retailers Home World Group and Five Star Appliance; juice maker Huiyuan Juice; and carmakers Guangzhou Automobile and China Southern Auto.

The listing spree is expected to come to a peak with two mega IPOs from the Bank of China and the Industrial and Commercial Bank of China, both expected towards the middle of the year.

Mainland firms have been enthusiastic about going public in Hong Kong since 2004, partly due to a backlog for new listings on the mainland's bourses.

Hong Kong saw 57 new listings in 2005, with most firms either based on the mainland or with large operations there.

(China Daily 03/16/2006 page11)