Environmental protection firm to raise HK$3.6b
China Everbright International's controlling shareholder will take up the new shares
China Everbright International yesterday said it would issue HK$3.6 billion of new shares to its controlling shareholder to raise capital for developing its business.
The new shares represent 10.6 per cent of the existing share capital of the environmental protection company.
The stock jumped 8.3 per cent before closing up 3.5 per cent yesterday, reaching a record high of HK$9.40 despite the new share issue and a falling market. The benchmark Hang Seng Index fell 1.7 per cent on the day.
The optimism over the company, whose business includes water treatment and waste-to-energy power plants, stemmed from expectations that Beijing might roll out favourable policies for the environmental industry after its annual economic meeting this week, Lyncean Securities managing director Francis Lun Sheung-nim said.
"There is a lot of news forecasting that China is preparing a tax on carbon, which means the enterprises burning coal would have to pay this tax," Lun said.
Shares of other Hong Kong-listed firms in the environmental protection sector rose yesterday for the same reason. CT Environmental Group gained 6.3 per cent yesterday, while Tianjin Capital Environmental Protection went up 1.3 per cent.
Everbright will issue 430 million shares at HK$8.52 each - a discount of 4.4 per cent to the closing price on the prev-ious trading day - according to a filing to the Hong Kong stock exchange.
In August the firm said it might increase capital expenditure as it had won more projects than expected in the first half of the year.
The company had then said the planned capital expenditure for this year was three billion yuan (HK$3.8 billion) but it would be increased by at least 10 per cent. Chief executive Chen Xiaoping said at the time that Everbright was financially well prepared, with HK$2.8 billion of cash in hand.
Everbright plans to expand from coastal provinces to further inland and from inner-urban to suburban areas. It has also expressed interest in the overseas market. Proceeds from the new shares would be used "for the development of the environmental protection business" and general working capital, the company said in the filing.