Sinotruk (Hong Kong) Ltd, China's largest maker of heavy trucks, raised HK$9 billion (US$1.2 billion) in a Hong Kong initial public offering, said two people involved in the sale.

 

Sinotruk sold 702 million new shares at HK$12.88 each, the top of the range marketed to investors, said the people, declining to be identified before an official statement. The sale of a 32-percent stake values the company, based in Ji'nan, Shandong Province, at US$3.6 billion, or 18.8 times next year's profit as estimated by the banks handling the sale, they said, according to Bloomberg News.

 

The maker of Sitaier and Gold Prince trucks will use the funds raised to build new plants and improve technology as a construction boom boosts commercial vehicle sales in China. Heavy-truck sales rose 65 percent in the first 10 months of the year, according to Wang Mingcun, an analyst at TX Investment Consulting Co in Beijing.

 

"China's economic growth and fixed-asset investments have boosted heavy-truck sales," she said. Investors will also be attracted to Sinotruk because "there isn't much choice for heavy-truck stocks," she added.

 

Heavy-truck sales in China may rise 20 percent next year, Wang said. Sinotruk will also benefit from ownership of the group's profitable engine plant, she added.

 

Hong Kong individuals sought more than 300 times the number of stock initially set aside for them, said the people. Demand from international institutions was about 50 times the shares still available to them, one of the people said.

 

The firm reserved US$200 million of stock for eight corporate investors, including Bank of China Investments Ltd, the investment arm of the nation's second-biggest bank, and the Government of Singapore Investment Corp, people familiar with the sale said earlier this month.

 

Sinotruk's stock is slated to begin trading on the Hong Kong Stock Exchange on Wednesday.

 

(Shanghai Daily November 22, 2007)