Subprime doesn't damp IPO demand
Mainland companies are seeing huge demand from retail and institutional investors in Hong Kong, despite the recent stock crisis triggered by the US subprime mortgage crunch.
Some 30 billion yuan worth of initial public offerings by mainland firms are in the pipeline for Hong Kong.
The majority of mainland companies going public in Hong Kong are medium-sized enterprises from a wide range of industries including energy, textiles, technology and food.
Hidili Industry International Development raised the indicative price range for its HK$4.1 billion share sale after its international placement was 10 times oversubscribed.
The Sichuan-based coking coal miner will offer 600 million shares. It set a new price range of HK$5.05 to HK$6.83 apiece after initially pricing the offer at HK$5.05 to HK$6.65.
Hidili will today close the four-day subscription of its retail tranche, which accounts for 10 percent of the share offer. It will announce the offer price tomorrow.
"Hidili's advantage is that margins for coking coal are much higher than for thermal coal," said Kenny Tang, associate director of Tung Tai Securities in Hong Kong.
Investment bank UBS is sponsoring the offer. It said Hidili, which supplies steel producers, also has an advantage in low transport costs, as its major customers are located nearby in Southwest China.
Hidili plans to start trading shares on September 21.
Global Bio-chem Technology Group's (GBT) sweetener arm, which aims to raise HK$612 million in a Hong Kong IPO this month, is also creating a buzz.
Its spin-off, Global Sweeteners Holdings, posted a net profit of HK$150 million in 2006, an increase of 63 percent.
Tang said unstable corn prices would put pressure on the profit margins of Global Sweeteners, even as demand for sugar on the mainland surges.
The sweetener producer will end its four-day retail offering at noon today and will release a final price on September 19, the day before it's due to begin trading.
Zhang Fusheng, executive director of Global Sweeteners, said the company will use the funds raised to expand capacity.
(China Daily 09/13/2007 page15)
