• Sun
  • Apr 20, 2014
  • Updated: 4:32am

Honghua wins retail investors

PUBLISHED : Tuesday, 26 February, 2008, 12:00am
UPDATED : Tuesday, 26 February, 2008, 12:00am

Honghua Group, the first mainland company seeking to go public in Hong Kong after the Lunar New Year, attracted a respectable response as investors bet that the country's top oil rig maker will bring decent returns, despite recent market volatility.

Securities houses polled by the South China Morning Post said Honghua, the world's second-largest manufacturer of onshore oil and gas drilling rigs, received about HK$358 million worth of margin orders yesterday, the first day it opened to retail investors for margin financing of its retail tranche.

In just one day, Sun Hung Kai Financial Group attracted HK$310 million worth of margin financing orders from local investors, while Phillip Securities (HK) received HK$48 million worth. The combined HK$358 million is HK$12 million shy of covering Honghua's retail offer of HK$370 million worth of shares.

'Market reception towards Honghua has turned out to be okay so far,' said Dick Lee, a corporate finance officer at Phillip Securities.

Mr Lee said that although the recently bearish market had made investors cautious, their faith in industry leaders seemed firm. 'People think Honghua will do fine on the back of high oil prices as well as increasing global demand for oil exploration equipment,' he said.

Fulbright Securities, which does not provide margin financing for Honghua, shared the optimistic outlook towards Honghua's share sale.

'Honghua has strong profit-making capability,' said Fulbright general manager Francis Lun Sheung-nim. As the global crude price remained high, oil companies would accelerate exploration, allowing Honghua to cash in, he said.

Honghua, which is selling 833 million new shares at between HK$3.16 and HK$4.50 each, hopes to raise HK$3.7 billion for expansion.

The Sichuan-based company forecast a net profit of at least 538.3 million yuan for last year, up 30.4 per cent from a year earlier.

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