bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

paywallTypes

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

MOTORCYCLES may be just the thing needed to rev up Shenzhen's stalled B-share market this summer, analysts say.

    Norinco Jianshe, which incorporates China North Industries Group subsidiaries Chongqing Jianshe Yamaha and Shenzhen Norinco, has started marketing shares in the United States, Britain and France in anticipation of a July listing.

  About 477 million yuan (about HK$444.36 million) in shares were scheduled to go on sale in a few days at a price 6.5 to seven times estimated earnings, according to a source at Guotai Securities in Shenzhen, the company's domestic underwriter.

  The company plans to issue 25 per cent of the shares as B shares, available to foreign buyers.

  A market source said: 'In the past, the market capitalisation of most B-share companies in Shenzhen was too small and there were too many real estate companies.

  'But that is what Norinco Jianshe will change. This company has a much higher market capitalisation and much stronger market fundamentals.'   Guotai Securities and HG Asia, international co-ordinator of the sale, were betting that a relatively low price-earnings ratio, coupled with the high growth rate of China's motorcycle industry, would ensure a strong market response to Norinco Jianshe's listing despite the weakness of the Shenzhen market.

   According to a Swiss Bank Corp equity analyst, domestic sales of motorcycles soared 87 per cent to 1.53 million units in the first quarter of this year,   Motorcycle production reached 5.1 million units last year, up 33 per cent from 1993.

   This year production was expected to top six million.

  The Swiss Bank analyst said: 'The bicycle market is saturated in urban areas, with ownership topping two per family.

  'People now have higher incomes and are looking for more comfort.'   The real fear is that Norinco Jianshe, rather than curing Shenzhen's liquidity problem, may be swallowed up by the very situation it was hoped to remedy.

  One analyst suggested that if underwriters had difficulty selling the stock to investors, they might need to dump it into long-term funds, which would negate any positive effect Norinco Jianshe could have on boosting turnover.

  Hopes that Norinco Jianshe could have an effect on the Shenzhen B-share market would be slim if Guangdong Electric Power Development was not also planning to list shares later this month, analysts said.

  The company plans to raise US$100 million in the largest B-share issue in Shenzhen.

   The shares would be issued at a price-earnings ratio of 6.3 to seven times under the sponsorship of Nomura International.

  Chongqing Jianshe Yamaha chairman Chen Zishen was not excited by the prospect of listing in Shenzhen but the company's large-scale expansion plans made it necessary.

  'Of course, we originally intended to list H shares in Hong Kong, but rules are rules,' he said.

  'We did not have a choice about what kind of shares or where we could list. I'm confident the listing won't encounter any major problems because this is a strong company with a good business.'   Although Norinco Jianshe was partially exposed to the high yen because some parts were imported from Japan, the company said it planned to accelerate local content development.

  Norinco Jianshe, which earned a pre-tax profit of more than 300 million yuan last year, intended to use the listing proceeds to expand production and develop new motorcycles.

  New testing equipment and computer-aided design and manufacturing would also improve quality.

  Mr Chen said the company would focus on developing motorcycles with a cubic capacity (cc) of 55 immediately, with 100 cc and 150 cc models in 1996 and 1997. Production of scooters would rise from 840,000 in 1994 to more than a million this year.



Motorcycle firm tipped to gear up slow market