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L.K. Technology Holdings, the mainland's largest die-cast  machine manufacturer, has set the indicative price range of its up to HK$282.5 million Hong Kong initial public offering, market sources said.

The company will sell 250 million shares, or 25 per cent of its enlarged share capital, at 91 HK cents to HK$1.13 each, representing 8.5 times to 10.5 times its historical earnings, the sources said.

Its Hong Kong-listed peers Chen Hsong Holdings and Lung Kee (Bermuda) Holdings trade at 9.6 times historical earnings.

Hong Kong-based L.K. Technology plans to start book building for the deal's institutional tranche tomorrow.

Sales to individual investors will begin on  Friday  and the stock is expected to start trading on October 16.

Tai Fook Capital is the sponsor and lead manager.

L.K. Technology's business includes hot and cold chamber die-casting, injection moulding and alloy die-casting machines  widely used  in the manufacturing sector, ranging from cars and toys to electrical appliances.

The firm, which has production facilities in Shanghai, Shenzhen and Zhongshan in Guangdong province, Fuxin in Liaoning province and Ningbo in Zhejiang province, sold 1,500 die-casting machines in China last year or 44 per cent of the mainland market.

Sources said L.K. Technology plans to use 36 per cent of the proceeds from the share sale to expand  annual production capacity to 5,160 standard units of machines from 4,800 units.

It also plans to use 13 per cent of the proceeds for mergers and acquisitions and 23 per cent for debt repayment.

The company reported net profit of HK$107.6 million for the year  ended March, up 4.7 per cent from HK$102.8 million a year earlier,  after a 22 per cent rise in turnover to HK$851.5 million as  margins were squeezed  by soaring steel prices.



Price range set for L.K. Technology share offer