UNFAZED by the lukewarm response to the latest China share offering, Luoyang Float Glass is proceeding on schedule with its Hong Kong listing plan, according to the company's sponsor. ''We are going ahead at full force with the listing plan. We have no intention of delaying the issue,'' said Gary Chan, associate director of China Development Finance. The merchant bank also acted as the co-sponsor of Tianjin Bohai Chemical Industry (Group) Co's initial public offering, which was 1.25 per cent subscribed, the lowest compared with the seven H share counters already listed. Mr Chan blamed the declining equity market as the main reason for the disappointing performance, when the stock opened to public subscription last week. ''Timing is an important factor,'' he said, ''because market conditions will affect the result of a new listing - making it successful or not.'' However, he said the market situation was changeable and not necessarily unfavourable to Luoyang's float, and he pointed to the market's sharp rebound of 4.29 per cent yesterday. Luoyang will become the first of a second batch of 22 mainland government-run enterprises designated for overseas listing to float in the territory. The firm gave the Hong Kong media a tour of its plant last month and it is understood the company plans a share offering by early next month. Hong Kong fund managers were guarded over prospects in the H share market, which is plagued by jitters over China's inflamed economy, but they said they were still shopping around for good bargains. They attributed Tianjin Bohai's poor subscription rate mainly to its uninspiring fundamentals of low profit margins and problem of ''triangular debts''. Tina So, fund manager of Schroders Asia Fund Management, said: ''As the stock market is no longer liquidity driven like last year, investors are focusing more on companies' fundamentals such as earnings growth.'' Other than potential political instability in China, she also noted uncertainties surrounding the country's sweeping reforms in the banking system and state-owned enterprises. Simon Lee, fund manager of SHK Fund Management, shared the caution. He said the company's China fund maintained only ''a minimal exposure'' to H shares and it had reduced its holding since the end of last year. The markdown was prompted by the overpricing of Tsingtao Brewery Co and Maanshan Iron & Steel Co and the series of reforms launched by China in January, he said. Besides the concerns of the macroeconomic environment in China, Mr Lee said the Chinese companies would suffer from the mounting problem of bad debts and unexciting earnings growth in the next two years. Amid the prevailing bearishness, he said he did not intend to subscribe heavily in forthcoming H share issues. But he said he would prefer companies with established overseas markets, so they would be shielded from bad debts incurred under China's credit squeeze on big, state-owned enterprises.
