Mainland firms plan US$3.9 billion IPOs as market steadies
Updated: 2007-09-08 06:31
By Lillian Liu(HK Edition)
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With the stock market in Hong Kong remaining buoyant, more than 10 mainland companies are gearing up for initial public offerings (IPO) in the city this month which will raise about 30 billion yuan (US$3.9 billion).
The firms are mainly small and medium-sized enterprises from a wide range of industries such as energy, garment, technology, and food. The firms are expected to set lower prices than their bigger home rivals who had listed earlier in Hong Kong.
The US sub-prime mortgage crisis does not seem to have any impact on the investing public in Hong Kong. Demand for new shares stayed as high as ever.
The IPOs will be led by Hidili Industry International Development, a Sichuan-based coal coking miner, which plans to raise as much as US$525 million.
Hidili, which will offer 600 million shares, has set its new IPO price range at HK$5.05 to HK$6.83, from HK$5.05 to HK$6.65 it previously announced.
Hidili Industry, whose shares have been six times oversubscribed by institutional investors, is an essential material supplier to steel producers in the country.
Investment bank UBS is sponsoring the offer.
Global Bio-chem Technology Group's (GBT) sweetener arm is another attraction for the investors.
The country's leading corn processor has applied to spin off its sweeteners business on the Hong Kong Stock Exchange (HKSE) and planned to raise up to HK$690 million amid expectations the parent company will book exceptional gains of about HK$310 million this year from the IPO.
The spin-off, Global Sweeteners Holdings, recorded a net profit of HK$150 million in 2006, representing a robust growth of 63 percent.
Executive director from Global Sweeteners, Zhang Fusheng, said the company will use the money to expand capacity.
"Each mainland resident needs an average of 3 kg sweetener each year, the number will increase to 4.5 kg three years later with an annual growth of 10 percent," said Zhang.
To meet the growing need on the mainland, the company is preparing to expand production lines in Shanghai and Changchun in Northeast China's Jilin Province, said Zhang.
Reports from Deutsche Bank last month recommended investors to buy stocks from GBT.
Shares of Chinese food producers are the "ultimate play" because rising wealth in China, home to one-fifth of the world's population, is set to increase demand for livestock and the grains to feed the animals, according to Deutsche Bank.
Another listing candidate, garment maker Bosideng Corporation, is seeking listing committee approval for a HK$7.8-billion share sale on the Hong Kong bourse.
The deal will be handled by Morgan Stanley and Goldman Sachs.
(HK Edition 09/08/2007 page3)