China Agri-Industries Holdings, the mainland's largest processor of crops, aims to raise as much as HK$2.7 billion in a Hong Kong listing to fund business operations, sources said.
The company, a unit of Hong Kong-listed Cofco International, planned to sell 697 million new shares at between HK$2.78 and HK$3.90 each, representing 10.7 to 18 times its forecast earnings for next year and 2.2 to three times its book value, sources said.
'It doesn't seem to be expensive given the tremendous demand in the mainland agri-processing sector over the next five years, as well as the potential appreciation of the yuan,' a fund manager said.
'I would like to buy [China Agri] shares at around 2.4 times to 2.5 times its price to book value, about the middle of the proposed range.'
China Agri probably will benefit from the mainland's growing domestic demand with net profit rising 12 per cent to 770 million yuan this year and turnover by 21 per cent to 24 billion yuan, according to a BOC International research report sent to institutional investors.
BOC International values the firm at HK$13.3 billion to HK$14.2 billion, representing 16.6 times to 17.7 times forecast earnings this year.
The firm plans to take subscriptions from institutional investors from Monday.