Huaxi Holdings, a maker of cigarette-related packaging materials, plans to buy advanced technology with funds raised from a planned HK$62.1 million initial share sale. Founded in 1992, Huaxi is offering 75 million shares, or about 25 per cent of its enlarged share capital, at an indicative range of HK$1.18 to HK$1.48 a share. Huaxi, which says it is the fourth-largest maker of cigarette-related products by revenue in Guangdong province, has yet to identify a potential acquisition target, but chairman Zheng Yisheng said the firm intended to boost its market share in the cigarette packaging industry. Zheng, who received a dividend payment of HK$27.7 million before the share offering, or about 45 per cent of the entire deal, yesterday declined to elaborate on the size and nature of business of any relevant acquisition target. Huaxi's revenue growth fell to 5 per cent in the year to March from 25.3 per cent in the previous year, while profit growth dived to 50.7 per cent from 208.5 per cent. Adding to the pain of slowing growth, average inventory turnover days - the number of days the company needed to clear its inventory - had risen persistently, from 40 days in 2011 to 52 in March and 58 in September. Asked about the renewal of sales contracts with its biggest customer, Guangdong Cigarette Manufacturer, Zheng declined to comment. Six of Huaxi's 10 sales contracts with Guangdong Cigarette, which account for more than half of its overall revenue, will expire in May next year while three will end in November. Despite a relatively small offering size, Huaxi has a cornerstone investor. Hong Kong-listed cigarette packaging material manufacturer Sheen Tai will take a stake for HK$20 million. Huaxi's stock is due to be priced on December 5, with trading set to begin the next day.