Sinotrans Shipping, a unit of state-owned Sinotrans Group, may spend US$3.5 billion in the next five years to boost capacity amid rising demand, according to a report by one of its listing sponsors. Sinotrans Shipping operates 34 vessels, including 26 dry bulk carriers and three oil tankers, with a combined capacity of 2.16 million deadweight tonnes, according to a report by BOC International. The firm also runs five container ships with capacity totalling 2,230 twenty-foot equivalent units (teu). The company had placed orders for eight dry bulk vessels and one oil tanker with a combined capacity of 1.13 million dwt, as well as four container ships with an aggregate capacity of 3,388 teu, it said. Dry bulk shipping and the oil tanker division accounted for 92.9 per cent of the company's turnover last year. The remainder was from the container ship business. The company kicked off the pre-marketing of its upcoming US$1.3 billion initial public share offering on Monday, sources said. The road show for international investors will run from November 5 to 14. Trading in the shares will start on November 23. Sinotrans Shipping planned to sell 1.4 billion new shares, representing 35 per cent of its enlarged share capital, and would use the proceeds mainly for acquiring new ships, the sources said. BOC and UBS are arranging the share sale. 'A total of US$200 million worth of shares will be anchored for a list of cornerstone investors, including local tycoons and worldwide shipping companies,' a source said. The company originally planned to raise US$1 billion from the share offering, but raised the target by 30 per cent due to the strong market sentiment and the recent rally in shipping stocks. 'The shipping sector has bottomed out and the firm is also likely to benefit from potential asset injection from the strong parent after the listing,' said a fund manager who was invited to subscribe for shares in the company. BOC values Sinotrans Shipping at between HK$30.2 billion and HK$40.7 billion, or 13.1 to 17.6 times forecast earnings for next year. Its listed peers, Pacific Basin Shipping and Taiwan's U-Ming Marine Transport, are trading at 12.1 and 10.3 times forecast earnings for next year. BOC expects Sinotrans Shipping could deliver a 115 per cent increase in net profit to US$297 million for next year, compared with US$138 million for this year.