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China Netcom Group Corp. (Hong Kong) Ltd. had set its initial public offering (IPO) shares at a price range of HK$7.88 (US$1.01) to HK$9 apiece, the company announced Wednesday.
It plans to raise between HK$ 8.24 billion and HK$9.41 billion by selling more than 1 billion shares, accounting for about 16.2 percent of the company's stake.
It had a green-shoe option to sell another 15 percent of the offered shares, the company said.
The size was lower than the market's expectation of US$1.5 billion, analysts said.
Netcom has started its international road-show late Wednesday. It is selling its shares at 5.1 to 5.9 times of its projected 2004 earnings.
Netcom expects its 2004 net profit to be about 9.15 billion yuan (US$1.11 billion), or 1.63 yuan per share.
Its price range was attractive to investors as it translated into a much lower price-to-earnings ratio compared with its archrival China Telecom Corp.'s ratio of 7.5 times, analysts said.
Netcom, China's second largest fixed-line operator behind Telecom, operates six provincial and municipal fixed-line networks in North China and two branches in the south.
It plans to list its shares in the United States Nov. 16 and in Hong Kong the following day, expecting net proceeds of US$966 million.
Up to US$483 million of the total proceeds will be used to expand and upgrade the company's telecommunication network infrastructure, while up to US$290 million will be used for loan payments and up to US$97 million for the developing of new applications and services.
The rest would be its working capital, the company said.
(Shenzhen Daily October 28, 2004)
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