Construction equipment maker plans $400m IPO (2005-8-5)

China Infrastructure Machinery Holdings, a mainland construction equipment maker, hopes to raise more than HK$400 million next month in an initial public offering in Hong Kong, according to market sources.

Two other mid-size offerings are already planned for September, with mainland watch distributor Xin Yu Hengdeli planning to raise HK$200 million to HK$300 million. China Hai Sheng Holdings, the country\’s largest apple juice concentrate producer, hopes to sell shares worth about HK$300 million. CLSA is arranging the Hai Sheng sale while Guotai Junan (Hong Kong) is the sponsor and the sole bookrunner for Xin Yu Hengdeli.

China Infrastructure Machinery, which picked Cazenove Asia as its sponsor, will use the funds raised in the IPO to fund capital spending, including the construction of new factories.

It currently operates two plants in Shanghai and Fujian province, with annual production capacity of 15,000 wheel loaders and 2,000 road rollers.

The company has profited from China\’s booming economy and its massive need for infrastructure construction, though austerity measures imposed by Beijing have slowed its growth. Demand for construction equipment slumped 20 percent in the first quarter from year-ago levels.

Even so, China Infrastructure Machinery saw sales of wheel loaders, common on large construction projects, jump 17 percent in the first five months of the year to 7,002. Overall, the firm\’s revenues grew to more than one billion yuan (HK$959.3 million) in the first four months of 2005, with most of its sales to the high end of the construction and mining equipment markets. The company has 14 percent of the heavy-duty construction equipment market. Shares of First Tractor, another construction equipment maker traded in Hong Kong, currently fetch HK$1.50, about 22 times forecast 2005 earnings.

(Source: thestandards.com)