China truck maker seeks $7.8b from IPO

China National Heavy Duty Truck Group, the mainland's third-largest truck maker, planned to raise between $5.5 billion and $7.8 billion in an initial public offering in Hong Kong by the end of the year, market sources said.

United States investment bank JP Morgan was among the banks that had been hired to arrange the share sale, the sources said. The bank declined to comment.

'There's always demand for China IPOs, but I don't think it can duplicate the success of Dongfeng [Motor Group], whose shares rode the crest of the market rather than their own business,' said Francis Lun, a general manager at Fulbright Securities.

Shares of Dongfeng, the largest heavy truck maker in China, have doubled to $3.525 from its listing price of $1.60 in December last year. They trade at 13 times estimated earnings for next year.

The Hang Seng Index hit an almost six-year high of 17,301.79 points on May 8, rising 16.3 per cent from the start of the year. The index has since dropped on interest rate fears and closed at 15,804.81 yesterday.

Heavy Duty Truck severed ties with Weichai Power after Weichai found out it was buying engines from rival Hangzhou Motor Engine Factory. Weichai had been trying to buy Hangzhou Motor for two years but the plan was stalled by Heavy Duty Truck.