XCMG shares surge on IPO plan
The share price of Shenzhen-listed XCMG Construction Machinery rose 4.2 per cent to 59.60 yuan (HK$69.97) yesterday after the company announced plans for an H-share listing in Hong Kong.
XCMG Construction's H-share capital will not exceed 20 per cent of its existing share capital and it aims to list in Hong Kong within 18 months, the company said in an announcement to the Shenzhen Stock Exchange. As of yesterday its market capitalisation was 61.47 billion yuan, implying that the gross proceeds from its Hong Kong initial public offering could be as much as 12.3 billion yuan.
'The objective of the H-share listing is to transform the company into one that raises international capital,' XCMG Construction said.
The company said the Hong Kong IPO would improve its capital structure. Net proceeds would be used to finance international expansion, increase its sales network, research and development as well as general working capital, it said.
XCMG Group, the parent company, is one of China's biggest construction machinery makers and among the top 10 in the world, according to its website.
XCMG yesterday also announced plans to invest 70 million yuan in its wholly owned import-export subsidiary, which will increase the subsidiary's registered capital to 140 million yuan. Currently, most of its revenue is derived from the mainland.
XCMG Construction's turnover rose 30.7 per cent to 20.7 billion yuan in 2009, while its net profit grew 16 per cent to 1.74 billion yuan.
Another Shenzhen-listed construction machinery firm, Changsha Zoomlion Heavy Industry Science and Technology Development, raised HK$13 billion from its Hong Kong IPO last month.
There was a growing trend for mainland-listed firms to also list in Hong Kong, an investment banker said. 'These companies want foreign currency financing and have ambitions to grow their international business,' the banker said.