Copper producer CNMC cuts IPO target to HK$2.4 b
State-owned copper producer China Nonferrous Mining Corp (CNMC) plans to raise up to HK$2.44 billion in an initial public offering in Hong Kong - less than the original target.
Weak market sentiment prompted the company, which runs copper mines in Zambia, to lower its fund-raising goal. In the pre-marketing stage it was reported that it planned to raise about HK$3.9 billion.
'The market atmosphere is not ideal for IPOs,' said Kenny Tang Sing-hing, general manager of AMTD Financial Planning.
He said investors were concerned there would be less demand for raw materials if mainland economic growth slows down more than expected. Investors would be sensitive to fluctuations in raw material companies' stock prices, Tang said.
Shares in Hong Kong-listed Aluminum Corporation of China have fallen 12 per cent in the past four weeks, to HK$3.33, while the city's benchmark Hang Seng Index fell 3.9 per cent in that period.
'CNMC offers a share price at a price-to-earnings multiple of about six, which is not high,' Tang said.
A unit of parent company China Nonferrous Metals Mining, it is selling 870 million shares at HK$2.10 to HK$2.80 each, Bloomberg reported. That price range represents a prospective price-to-earnings multiple of between six and 7.9 for this year.
CNMC has sent a team to Hong Kong to market the IPO of its copper assets in Zambia, spokesman Wang Changming said on Monday.
Three cornerstone investors, including China Cosco and China Railway Construction, have committed to purchase US$70 million of shares.
'Long-term investors will be interested,' Tang said. 'Even though mainland economic growth is slowing, China's demand for resources will still be huge in the long run.'
The shares are expected to be priced next week and the company will list in Hong Kong on May 31. ABC International, CICC, JP Morgan and UBS are the joint book runners.