Jinan Qingqi Motorcycle Co hopes to raise US$115 million from the sale of B shares in Shanghai to aid a technology upgrades and diversification into new models. The company - China's biggest motorcycle producer - will sell about 230 million shares at between 40 and 50 US cents a share, putting the issue on a prospective price earnings multiple of 7.8 to 8.8 times. Jinan Qingqi, which made 1.4 million motorcycles last year, forecast this year's earnings to be no less than 408 million yuan (about HK$381.3 million), up sharply from 256.3 million yuan last year. The firm's products are made under licence with Suzuki Motor Corp of Japan. It already has A shares listed on the Shanghai stock exchange. Proceeds from the sale are expected to go towards the acquisition of production facilities and technical equipment to develop new models and related engines and components. Part of the funds will also be earmarked for the upgrading of existing facilities and general working capital. Its best selling products have been motorcycles with engines of 50 cc or below, which accounted for 78 per cent of sales, or 32 per cent of market share. Hai Tong Securities is the lead manager for the issue, and Yamaichi International (HK) is the international co-ordinator. A research report from Yamaichi shows that China is saturated with more than 120 motorcycle manufacturers, with new capacity continuing to come on stream this year. There are only two companies - Jinan Qingqi and China Jialing - with output more than the one million mark. Despite stiff competition, Jinan Qingqi's market share rose to 15.8 per cent last year from 13.4 per cent in 1995, while operating margins increased to 8.9 per cent from 5.1 per cent. Major cities have been imposing restrictions on motorcycles due to traffic congestion and air pollution. Shanghai, for example, has stopped issuing new motorcycle licences.