KUNMING Machine Tool Co attracted applications for 628 times the number of H shares available in the second-largest subscription of its kind in Hong Kong. The issue received 18.91 billion applications representing 40.85 billion H shares and an aggregate of $81.7 billion of public money received. Kunming is the sixth H-share listing in the territory by a mainland-incorporated company. Chairman Zhao Zhongyue said: ''We are very pleased with the favourable response to the company's H share offer. ''The investing public's overwhelming support to the H-share new issue clearly reflects the market's recognition of the company's unique and dominant position in the [China] machine tool market.'' Denway Investment saw Hong Kong's biggest listing subscription, in value and number of share terms. The listing of the Hong Kong-incorporated mainland car maker in December last year attracted a subscription level of 657 times the shares available, amounting to $240 billion. The total value of public money committed was the largest in a new listing in the history of capitalism. In the Kunming issue, sponsored by Baring Brothers, 65 million shares were offered to the public at 2.20 yuan, payable in Hong Kong dollars at $1.98 each. The issue had little effect on the financial system, although the general pressure of listings at present took the interbank rate from less than 2.6 per cent on November 25 to 3.95 per cent yesterday, according to Bloomberg data. At the time of the Denway issue, interbank rates rose to more than six per cent. Jointly underwriting the Kunming issue were Baring Brothers, Barclays de Zoete Wedd (Asia), China Development Finance (HK) and Shanghai Hong Kong International Capital. Mr Zhao said the proceeds raised from the H-share issue and a proposed issue of 60 million A shares, planned to take place this month, would provide the company with capital to enter into a major development stage. ''I believe the encouraging response is also an endorsement from the Hong Kong financial community to the strong economic development in China,'' he added. The machine-tool maker has 10 production plants with a land area of 271,714 square metres. It has 4,100 staff, of which more than 3,000 will work for the shareholding company. Set up in 1938, the machine tool maker produces six types of products. These are horizontal boring machines, jig boring machines, machining centres, precision measuring machines, copy milling machines and precision displacement transducers. Last year, it made a profit of about 16.4 million yuan (about HK$22 million at the official rate) on a turnover of about 93 million yuan. No figures were given on the size of the mainland market, to which 90 per cent of Kunming's products are sold. Trading in the H shares is expected to begin on December 7. Based on projected earnings this year of at least 31 million yuan, the issue price of 2.2 yuan puts the stock on a prospective price-earnings ratio of 10.62, on a fully diluted basis. Pro forma earnings per share are 20.72 fen on a fully diluted basis, while the dividend yield is forecast at 3.3 per cent. The H-share issue represents 26.5 per cent of the enlarged share capital. The A shares will represent 24.5 per cent of the enlarged share capital. A representative of the company said its customers made machinery for transport, energy, aerospace and electronics. In the past three years mainland customers accounted for 92 per cent of sales.