Companies to brave chilly waters with IPOs
Undeterred by the poor secondary market performance of the most recent newcomers and sluggish demand for the initial public offering of China Resources Peoples Telephone, two more companies are launching Hong Kong share offerings today.
Shandong Molong Petroleum Machinery, a manufacturer of petroleum extraction machinery, plans to raise up to $105.08 million from a listing of 138.27 million H shares on the Growth Enterprise Market, while AMS Public Transport has confirmed its intention to become Hong Kong's first green minibus operator to list on the main board.
AMS aims at raising $53.5 million from the sale of 50 million shares at $1.07 each, with net proceeds going mainly towards acquisitions of other minibus operators and bidding for new routes. Sources earlier said the company planned to sell 53 million shares.
Retail subscription for both IPOs will open today, with trading scheduled to begin on April 15.
Shandong Molong's offer comprises 134.99 million new shares and 3.27 million old ones, with 90 per cent of the offer going to institutional and professional investors and the remainder earmarked for retail investors.
The offer also includes an option to issue an additional 539.99 million shares in the event of strong demand.
The shares will be priced at between 56 and 76 cents each, which translates into a price to 2003 earnings ratio of 5.52 to 7.5 times - far short of the industry average of 24.25 times, according to a research report by Guotai Junan Securities.
The company which supplies equipment to PetroChina and China Petroleum and Chemical Corp has seen a 281 per cent improvement in net profit over the past two years to 43.97 million yuan last year.
Proceeds from the listing would be used to boost production capacity and to expand its sales and distribution network in strategic locations in Southeast Asia and the Middle East, company chairman Zhang En Rong said.
