Zinc giant to go on mines hunt after $1.7b offering
Expansion drives Hunan Nonferrous and knitwear maker to tap the market
Listing candidates Hunan Nonferrous Metals Corp and Co-Prosperity Holdings launch their retail tranches today to tap the market for a combined $2 billion.
Riding on the strong response to earlier new offerings, including Golden Eagle Retail Group and China National Building Material, Hunan Nonferrous Metals announced its up to $1.77 billion fund-raising plan yesterday.
The mainland's largest zinc and antimony producer is offering 1.07 billion shares at an indicative price of $1.20 to $1.65 each, or 7.1 to 10.3 times this year's forecast earnings.
The company sources 10 per cent of its lead concentrates, 30 per cent of its tungsten concentrates and 60 per cent of its antimony concentrates from its own mines. The rest of the raw materials comes from other suppliers.
To control costs, chairman He Renchun said the company planned to increase production levels in its existing mines and buy additional sources of nonferrous metals.
According to Hunan Nonferrous Metals' preliminary offering prospectus, it planned to use about 50 per cent of funds raised to buy mining rights in mines with proven reserves.
The company said it intended to spend about 120 million yuan over the next four years on further exploration of the Huangshaping and Hsikwangshan mines.
As at September 30 last year, Hunan Nonferrous Metals had a gearing ratio of 142 per cent.
Chen Zhixin, deputy general manager and financial controller of the company, said the ratio would drop to 44 per cent after listing.
The stock is set to start trading on March 31 with Morgan Stanley and Bank of China International as bookrunners.
Also courting investors' money is knitwear manufacturer Co-Prosperity, which is offering 200 million shares to raise up to $232 million at a price range of $1 to $1.16 each, or 6.2 to 7.2 times historical earnings.
Chairman Sze Siu-hung said the firm would spend between $25 million and $30 million this year to expand its production capacity.
Co-Prosperity, brought to market by TIS Securities, is scheduled to start trading its shares on March 30.
Meanwhile, mainland department store operator Golden Eagle, which makes its trading debut today, announced yesterday that every subscriber would at least get one board lot or 1,000 shares.
The company priced its float at $3.15, the top of the range, to raise $1.41 billion. ABN Amro Rothschild and Goldbond are the bookrunners.
Yesterday, listing candidate Shanghai Prime Machinery, a sister company of Hong Kong-listed Shanghai Electric, also started pre-marketing its up to $1.3 billion float.
The company, which manufactures items ranging from screws to large turbine blades is aiming for a listing early next month. Credit Suisse is the deal sponsor.