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| Paper firm Chenming to raise HK$4.2b in IPO |
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http://www.feizouzhai.cn
2008-06-04 HK Edition |
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By Amy Lam
Shandong's Chenming Paper has no plan to place A shares after its Hong Kong initial public offering (IPO) as the company will fund its 9.43-billion yuan project with sale proceeds and bank loans, the company's senior executive said yesterday.
Executive director Yin Tongyuan said the project will help secure 90 percent of total raw material supplies for Chenming after its completion, compared with the current 65 to 70 percent currently.
Chenming Paper, which plans to raise HK$4.2 billion, will use 91 percent of sale proceeds for the Zhanjiang project, a tree plantation and pulp production plants in the Guangdong province. The new facility is expected to start production in the first half of 2010.
The company has also secured 5.7 billion yuan syndicated loan from China Development Bank and five other banks.
The loan will be invested into the project in the coming three years.
Yin said the company's gearing ratio in the first quarter of 2008 is 35.1 percent and it will keep the ratio at about 50 percent after the IPO.
Chenming Paper, the largest paper manufacturer in China by sales, will offer 355.7 million shares or 17.25 percent of its enlarged share capital, at a price range from HK$9 to HK$11.80 each.
The IPO's retail portion will open today and close on June 10. Its H shares will start trading on Hong Kong Stock Exchange on June 18.
Chenming will become the first firm that has publicly traded A, B and H shares. Its A shares dropped 3.33 percent to 15.37 yuan yesterday while its B shares fell 1.18 percent to HK$8.40.
The company offers a wide range of paper products including art paper, lightweight coated paper, white paper board, duplex press paper, writing paper, new print paper and paperboard. Its annual paper production capacity is about 3.17 million tonnes.
The company posted 994 million yuan net profits in 2007 on sales of 14.9 billion yuan. Its gross profits margin was 20.4 percent, rising slightly from 2006's 19.2 percent. The company said it will focus on high margin products such as art paper to keep the margin.
The first quarter of 2008 witnessed faster-than-expected sales volume, recording 4.12 billion yuan, and up 32.03 percent. Its net profits hit 469 million yuan, a rise of 154.36 percent.
By comparison, sales of Nine Dragon Paper totaled 9.8 billion yuan for the 12 months ended June 30 in 2007, while profits were 2.1 billion yuan.
Guotai Junan Securities is the sponsor, bookrunner and lead manager. Macquarie Securities is a co-joint bookrunner and co-joint lead manager.
Meanwhile, some media reported that China Life, tycoon Lee Shau-kee and China Everbright will subscribe to Chenming's IPO shares. The company management, however, did not comment on such report.
However, the IPO's institutional portion will close on June 6, earlier than previously planned because of the well-received subscription, according to the deal's sponsor. |
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