China Saite to focus on affordable housing on mainland
China Saite Group, a Jiangsu-based provider of steel structures and prefabricated residential buildings, plans to focus on developing affordable housing with a HK$425.8 million Hong Kong listing plan.
Established in 1998, China Saite paid back all its outstanding bank borrowings last year. Shares in the company are being offered in a price range of HK$1.03 to HK$1.25 per share. That represents a price-to-earnings ratio of up to six times, based on expected earnings this year.
Investment bankers familiar with the deal said the institutional tranche was covered by a number of "anchor investors".
They said the share offer represented a 25 per cent discount to state-owned industry peers including China Communications Construction, China Railway Construction, and China Railway Group. They said those shares had risen about 20 per cent since July.
"Saite's investment story relies on affordable housing on the mainland," one source said.
As a result of its repayment of debt, its gearing ratio dropped to 2.7 per cent last year from 96.8 per cent in 2011.
Some 146.7 million yuan (HK$187 million) of trade receivables was settled last year.
In 2011, the Ministry of Construction in Beijing said it planned to increase total construction output by 15 per cent a year.
Beijing plans to spend 6.2 trillion yuan on upgrading its transportation infrastructure during the period covered by the 12th five-year plan - 2011 to 2015 - China Saite chairman Jiang Jianqiang told a media briefing in Hong Kong yesterday.
That meant investment opportunities for investors, he said.
There are plans to build 1 billion square metres of new green buildings during the 12th five-year plan.
The firm will use about HK$175.8 million for capital expenditure over the next 12 months, with about 65 per cent of that to acquire existing factories, land and production facilities.
Orders from retail investors will be accepted from today until Friday. Pricing of the shares will take place on Friday.
Trading is scheduled to commence on November 1.