Guodian Technology and Environment Group plans to spend a total of 6 billion yuan (HK$7.32 billion) in this year's second half and next year on its power-plant pollution controls and clean-energy business development, and will plug the gap in proceeds from its initial public offering (IPO) with bank loans and operating cash.
The Beijing-based state-backed firm, a unit of the mainland's third-largest power producer, China Guodian Group, is aiming to raise up to HK$5 billion amid depressed global equity-market sentiment. This is lower than the HK$7.8 billion it was planning to raise earlier this year, according to a Dow Jones report.
Deputy chairman Ye Weifang conceded the poor market sentiment was a challenge for its fund-raising plan, but said it was a good opportunity for the industry's strong players to break away from the weak ones.
'It has been our plan since last year to build ourselves an international fund-raising platform,' he said. 'We believe we have the confidence and strength.'
Guodian Technology is pitching its shares at 14.5 to 16.3 times this year's forecast earnings, higher than the Hang Seng Index's average of 10.4 times. Some analysts said the stock deserved a multiple of 12 to 14 times, as it focused on installation of pollution-control equipment for coal-fired power plants - one of Beijing's key policy initiatives in the five years to 2015. This means it will likely enjoy steady business growth despite the weak global economic outlook.
Beijing made it mandatory to install facilities to remove sulphurous and nitrogenous emissions from coal-fired plants, and has provided higher power prices to fund this.