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SCMP Reporter

China Great Wall Computer Group is to capitalise on the recent surge in hi-tech stock prices to raise more than US$120 million from an H-share listing.

 The company received the green light from the Hong Kong stock exchange for the listing of its public vehicle Great Wall Technology on Thursday, sources said.

 Executives and advisers for the firm, controlled by the mainland's Ministry of Information Industry, would start an international road show next week to promote the share sale, which would represent about 35 per cent of its enlarged issued share capital, they said.

 The sale could raise between $120 million and $150 million depending on the pricing.

 The issue, sponsored by Salomon Smith Barney, would be pitched at a price earnings multiple of between a high single digit to low teens, according to estimates by market analysts.

 The company's main assets include its 56 per cent-held A-share company, Shenzhen Kaifa Technology, and its 64 per cent-owned A-share firm China Great Wall Computer Shenzhen.

 Shenzhen Kaifa, which is among the world's largest producers of magnetic heads for hard disks, is the main income provider.

 China Great Wall Computer Shenzhen, which makes personal computers and peripherals, was the seventh-largest PC seller in the mainland last year.

 A source close to the company said Great Wall Technology made a net profit of more than 400 million yuan last year (about HK$372.88 million), about half of which came from exceptional gains.

 The company expects the net profit to jump by up to 20 per cent this year, excluding exceptional gains.

 The listing proceeds would be used to invest in original equipment manufacturing of hard disks, to expand the production capacity of the existing business and to reduce debt, the source said.

 A fund manager said the company had the potential to hold the attention of long-term institutional investors.

 'The [computer] market has huge potential but it's a tough business. In the end it has to come down to efficiency and good management,' he said.

 The listing candidate is among the fourth batch of mainland companies picked by the China Securities Regulatory Commission for overseas listings.

 The company's plan to list has been hampered by the Asian financial crisis.

COMPUTERS 



Mainland ministry arm decides to cash in on hi-tech stock market boom