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Zhongxing Telecommunications Co Ltd (ZTE), the country's second-largest telecoms equipment maker, launched its roadshow Monday, bringing it a step closer to raising a maximum of HK$3.5 billion (US$448 million) on the Hong Kong market.
The move is the first attempt by a domestically-listed A share company to seek an overseas listing in Hong Kong.
According to the company's statement, it will issue a total of 160 million H shares in the Hong Kong market. The price of each share will be set between HK$17.5-HK$22 (US$2.24-2.82). But the exact price will be decided on December 2.
The stock is scheduled to be listed on December 9.
"About 60 percent of the funds raised will be used to further explore the overseas market," said the statement.
And the remaining 40 percent will be used to develop new and advanced technologies to help maintain the firm's leading position in the market.
Competing with both domestic and international counterparts such as Huawei, Motorola, Nortel and Lucent, ZTE with its more than 300 million subscribers is currently providing telecommunications equipment to the world's leading mobile market.
ZTE and its main domestic rival, leading telecommunications equipment maker Huawei Technologies, have risen to prominence in recent years, capitalizing on the multi-billion-dollar expansion of the telecommunications sector to develop their own expertise.
For example, the company has just won the biggest CDMA contract in Nepal early this month.
Under the terms of the contract, ZTE will supply CDMA2000 1X equipment to build a state-of-the-art network that will cover major areas of the country.
Some analysts argued that ZTE's hopes of raising US$448 million would further test the market's appetite both for Chinese firms and for telecoms equipment makers.
The market situation will be OK for ZTE's listing, said Dai Chunrong, an analyst with China Securities.
Last week, China Netcom accomplished a successfully IPO, showing investors' increasing fervor for China's telecom operators.
"The listing will help a lot to fund its core business and overseas expansion," she said.
ZTE earned a net profit of 513.18 million yuan (US$61.8 million) in the first half of this year, registering year-on-year growth of 163.5 percent.
Its core businesses had a turnover of 11.77 billion yuan (US$1.4 billion), up 100.7 percent year-on-year, the company said.
Profits for the core businesses also jumped 108.1 percent to 4.3 billion yuan (US$518 million).
"The momentum is very likely to be sustained given the strong demand in the domestic market as well as the recovery of international market," Dai said.
"Products with a comparatively low price but high quality, leading technologies as well as a full range of telecom products and services enable ZTE to take an upper hand in the international competition," Dai said.
"The quick expansion in the overseas market contributed a lot to drive up the company's business performance," Dai emphasized.
(China Daily November 23, 2004)
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