Metal producer will use listing proceeds to expand capacity
China Molybdenum, the largest mainland producer of the metal by annual ore mining capacity, hopes to sell shares at 11 to 15 times this year's earnings in a US$600 million initial public offering, sources said.
The proposed valuation is on par with its listed peer, Hunan Nonferrous Metals Corp, the mainland's largest zinc and tungsten producer, which is trading at 16 to 17 times earnings for this year.
'The offering is attractive due to the unique position of the firm in the mainland's molybdenum sector,' said a hedge fund manager who attended a pre-marketing briefing on Tuesday hosted by UBS, one of the arrangers of the China Molybdenum offering.
The investment bank has joined Morgan Stanley and China International Capital Corp to lead the share sale.
'The Chinese government has limited production of tungsten since 2005 and that caused excessive demand for that metal, driving up its price exponentially,' the fund manager said.