Buyers of the company's H shares are promised profit growth of at least 13pc AviChina Industry & Technology hopes to raise as much as $1.76 billion from a main-board listing and has promised investors net profit growth of at least 13.43 per cent this year. The company, the mainland's fourth-largest carmaker by units and its only helicopter maker capable of mass production, aims to sell 1.45 billion new H shares at between 95 cents and $1.21 each, according to sources. Parent China Aviation Industry Corp II, China Huarong Asset Management, China Cinda Asset Management and China Orient Asset Management will sell 145.44 million existing shares, raising $175.98 million for the National Social Security Fund as required by Finance Ministry rules in the listing of any state-owned firm. The indicated price range translates into a price-earnings ratio of 9.65 to 12.29 times this year's forecast profit of 9.84 fen (HK 9.2 cents) per share, based on 4.57 billion of total shares issued after the listing. Denway Motors, which has a 47.5 per cent stake in a sedan joint venture with Honda Motors, trades at about 14.8 times estimated earnings for this year. Brilliance China Automotive Holdings, the nation's largest minibus maker, trades at 13.5 times. AviChina is expected to achieve a return on equity of 15 per cent this year, compared with about 36.5 per cent for Denway and 14.5 per cent for Brilliance, BOC International (BOCI) said in a research report. BOCI and ING are joint global co-ordinators for the share offer. AviChina plans to pay 30 to 40 per cent of profit as dividends in the three years from April 30 next year. Denway paid out 22.9 per cent of net profit last year and Brilliance 8.36 per cent. Last year, AviChina derived 16.72 per cent of turnover and 26.6 per cent of earnings before interest and taxes (ebit) from the production of helicopters, regional jets, trainers and general purpose aircraft and aviation components. Production of minivans, mini-trucks and economy sedans accounted for 83.28 per cent of total turnover and 73.4 per cent of ebit. Minivans accounted for 84 per cent of total vehicle sales. The company commands 41 per cent of the mainland's minivan and mini-truck market. Gross profit margin for its aviation business was relatively steady at 20 per cent in 2000, 20.7 per cent in 2001, 23.8 per cent last year and 23.5 per cent in the first half. But gross margin for car manufacturing fell gradually from 25.8 per cent in 2000 to 24.1 per cent in 2001, 21 per cent last year and 18.3 per cent in the first half. Overall, gross margin dropped from 24.7 per cent in 2000 to 18.9 per cent in the first half. According to a preliminary listing prospectus obtained by the South China Morning Post, AviChina aimed to improve profit margins by making bulk purchases of standardised parts, increasing domestic component sourcing, integrating its sales and after-sales service network and cutting staff. BOCI expects AviChina's aviation operations to post higher profit growth in coming years, driven by the central government's promotion of civil aircraft usage. The company has formed a joint venture with Embraer of Brazil to produce jets of 30 to 90 seat capacity.