Beijing Airport may tap HK for more cash

PUBLISHED : Thursday, 16 October, 2008, 12:00am
UPDATED : Thursday, 16 October, 2008, 12:00am

Firm plans H-share sale after listing in Shanghai

Beijing Capital International Airport will consider issuing more H shares after its A-share debut next year as it seeks funds to buy Terminal 3 from its parent firm and a new airport near the capital.

The size of the Shanghai initial public offering would surpass an original plan and would be followed by a share sale in Hong Kong, the China Business News reported yesterday, citing Zhang Zhizhong, a general manager at Beijing Airport's parent, Capital Airports Holding.

'We are still studying the plan and nothing is concrete,' said Beijing Airport secretary Shu Yong.

The company agreed to acquire Terminal 3 from its parent firm for 26.9 billion yuan (HK$30.54 billion) in January but the deal is pending government approval.

The company had planned to raise about HK$8 billion by issuing up to 800 million A shares to finance part of the acquisition. The balance would be settled by debt.

However, the offering price can no longer be set at HK$10 per share as its H shares are trading far below HK$10 in Hong Kong.

It will therefore have to increase the number of A shares to mitigate for the drop in capital raising.

'The appetite for fund raising in both the A-share or H-share market is still very low given the present lukewarm sentiment,' said Karen Chan, a transport analyst at RCM.

'It is more viable for the company to sell shares to a strategic partner to raise funds.'

Shares in Beijing Capital Airport tumbled 6 per cent to HK$5.80 yesterday.

Government of Singapore Investment Corp owns a 19.36 per cent stake in the company's H shares while Vinci Concessions, a French infrastructure construction company, holds 28.54 per cent.

Ms Chan said Beijing Airport could turn to these shareholders to form a strategic partnership.

Beijing Airport reported a 90 per cent drop in net profit for the first half due to a tenfold increase in rental costs. It has been paying 180 million yuan a month to lease the terminal from its parent firm since March.

Shares in the company have fallen 15 per cent over the past three months as tighter security measures during the Olympics reduced air traffic into Beijing and major cities. However, it said demand had started to pick up this month and projected a 10 per cent increase for the year.

The Beijing municipal government is studying a plan to build a new airport to supplement the existing facility when it hits a maximum capacity of 100 million passengers a year. The site of the new airport would be finalised by December, the 21st Economic Journal reported yesterday, citing the general manager of Beijing Airport, Dong Zhiyi.

Mr Dong said there were two possible locations for the airport - south of Beijing or a spot outside of Beijing in Tianjin or Hebei province.