Building materials firm eyes HK listing
Eric Ng and Hui Yuk-min
China National Building Material Group Corp, the mainland's largest building materials maker, plans to raise a 'few hundred' million US dollars in a Hong Kong public listing in the first half of next year, sources said.
The company, directly administered by the State Council, has appointed Morgan Stanley as its listing sponsor and Ernst & Young as its auditor, according to sources familiar with the plan.
Not all of the company's total assets of about 20 billion yuan are to be spun off.
'They have yet to decide on what assets will be included in the listed vehicle,' one source said.
General manager Song Zhiping was quoted in January by the Economic Information Daily as saying the company had considered two listing options.
One would be to include cement, fibreglass and advanced building materials operations in the listing vehicle, which will have net assets of three billion yuan, turnover of five billion yuan and net profit of 300 million yuan. The other option would be list its cement operations first, before bundling the other divisions into a separate listing.
The company plans to produce 10 million tonnes of cement this year, and expand its output capacity to 15 million tonnes by the end of the year. The company is China's fifth-largest cement producer.
Mr Song earlier this week said that the building materials industry had borne the brunt of the central government's austerity measures. Product prices have been falling even as the costs of coal, transportation and power have stayed high.
'The pressure in the second half is still quite severe,' he said.
China's cement sales volume fell 5.4 per cent last month from May, while inventory rose 8 per cent and product prices fell 2.3 per cent to 3.5 per cent, according to a Daiwa Securities research report, which quoted China Building Materials Industry Association figures.
The firm said on its website that its net profit surged 201.3 per cent in the first half while turnover rose 73.8 per cent to 3.5 billion yuan.
Last year, net profit rose 24 per cent to 220 million yuan on revenues of 5.2 billion yuan.