Paper mills ride bull run to tap A-share markets for HK$6b

Three mainland paper manufacturers are considering raising as much as HK$6 billion by selling A shares in the coming quarter, according to bankers.

Qunxing Paper has hired ICEA to lead its HK$1 billion to HK$1.5 billion initial public offering while Guotai Junan will introduce Chenming Paper to the market seeking HK$3 billion, a market source said.

The third paper maker seeking A-share funds is Wing Fat Printing, a spin-off of red-chip Shanghai Industrial Holdings. It is seeking US$200 million, a banker said.

'It is definitely a right time for them to raise funds,' one investment banker said. 'The recent paper-maker stock rallies will help them to fix prices with higher valuations.'

He expects more paper-related initial public offerings soon, given the overwhelming demand and attractive valuations.

Shanghai Industrial confirmed last week it was considering a proposal to spin-off Wing Fat, which makes cigarette packaging and paper.

Shandong-based Chenming is likely to be the first company whose shares are traded in Hong Kong and the Shenzhen A and B stock markets as well.