Asia Cement (China) Holdings Corp (亞洲水泥中國控股公司), the China unit of Taiwan’s second-biggest cement maker, may raise as much as HK$2.42 billion (US$310 million) from a Hong Kong initial public offering, two people familiar with the sale said.
Jiangxi-based Asia Cement (China) plans to sell 375 million new shares, a 25 percent stake, at HK$4.85 to HK$6.45 each, said the sources, who asked not to be identified before an official statement. It will remain 75 percent owned by Taipei-based Asia Cement Corp (亞泥) after the public share sale.
A record 83 companies canceled IPOs worldwide in the first quarter, and 24 others delayed share sales, according to Ernst & Young LLP, as mounting financial industry losses linked to the US housing market pummeled stock prices.
However, companies have been returning to the market after the March 24 announcement of JPMorgan Chase & Co’s acquisition of Bear Stearns Cos brought hopes of an end to the crisis and lifted share prices.
Companies selling shares are offering wider price ranges in response to shifting investor sentiment and greater market volatility. Hong Kong’s benchmark Hang Seng Index rose 5.5 percent last week and had weekly losses of more than 5 percent twice in the past two months, according to data compiled by Bloomberg.
The IPO range values Asia Cement (China) at 15 times to 20 times this year’s profit per share as estimated by banks involved in the sale. Anhui Conch Cement Co, China’s largest maker of the construction material, trades at 25.6 times this year’s earnings as projected by analysts, Bloomberg data shows.
The profits of Asia Cement (China) nearly quadrupled to 246.2 million yuan (US$35 million) last year, from 65.2 million yuan in 2006, after it sold more cement and the prices of its products rose, according to a draft share sale document posted on the Hong Kong stock exchange’s Web site.
The company is raising capital to help fund expansion as its clinker production facilities have been running at close to 120 percent of capacity since 2005, said the document.
ABN Amro Holding NV and BNP Paribas SA are managing the sale. Doris Wu (吳玲綾), chief financial officer for Asia Cement in Taipei, confirmed plans to list the China unit. She declined to comment further yesterday.
Hui Yukmin, an ABN Amro spokeswoman in Hong Kong, and Christine Chan, a BNP spokeswoman in the city, declined to comment.
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