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SCMP Reporter

Haitian International Holdings, the world's largest plastic injection moulding machinery maker by production volume, plans to raise as much as HK$1.6 billion from an initial public offering in Hong Kong, sources said.

The company is marketing its 399 million shares,  a 25 per cent stake, at between HK$2.50 and HK$4 a share, market sources said.

The price range values Haitian, which began meeting with investors on Monday, at between 10.5 times and 15 times forecast  next year's earnings.

Smaller rival Chen Hsong Holdings trades at 10 times forecast  next year's earnings by comparison. Its shares have risen 7.5 per cent this year to close at HK$5 yesterday.

Given Haitian's larger size in terms of both profit and revenue, more sales in high-end products, more extensive sales network and better ownership structure, analysts at bookrunner BNP Paribas argue that Haitian should trade at a premium.

Swiss investment bank UBS is also one of arrangers.

Haitian kicks off a formal roadshow  tomorrow and the retail portion of the offering opens the following Monday. The company will stop taking orders from investors on December 15 and the shares will begin trading on the Hong Kong stock exchange on December 22

Haitian accounted for 17 per cent of global production volume and had a domestic market share of 28.6 per cent in terms of shipments  last year.

Chen Hsong, the mainland's second-largest injection mould maker, held 19.5 per cent of the China market  last year.

'We expect Haitian to achieve fast growth in revenue and profit in the foreseeable future, amid continuously strong demand for [injection moulding machinery] globally and in China,' the BNP report said.

'We expect its top line to benefit from its increasing small [injection moulding machinery] market share at the expense of smaller competitor and its product mix shift to more high-end products.'

BNP forecasts Haitian will gain 424 million yuan  this year, 572 million yuan  next year and 622 million yuan in 2008, translating into a 26.5 per cent compound average growth rate  from this year to 2008. It estimates the firm will distribute 25 per cent of its earnings as dividends in the  period.

Haitian's clients include mainland household appliance maker Hisense Group and a  vehicle manufacturing joint venture between Guangzhou Automobile and Honda Motors, Japan's third-largest carmaker.



Haitian International to raise HK$1.6b from share sale