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BOE Technology Group, China's No 1 producer of monitors and TV screens, plans to sell H shares in Hong Kong and is currently working on the details of the plan.
If permitted, BOE would become the first domestic firm to issue A, B and H shares.
H shares are shares issued on the Hong Kong stock exchange.
A shares are shares bought and sold using renminbi on China's two stock markets. B shares are sold on the same exchanges using foreign currencies.
BOE's board members on Tuesday voted unanimously in favour of the plan. But it still needs the approval of market watchdog the China Securities Regulatory Commission and Hong Kong Exchanges and Clearing Limited (HKEx).
The Beijing-based company issued B shares on the Shenzhen Stock Exchange in 1997, and A shares in Shenzhen in 2000.
According to the company, it plans to raise HK$2.5 billion (US$ 321 million). About HK$1.8 billion (US$231 million) will be used to pay back a bank loan and another HK$ 700 million (US$ 90 million) will be put into research and development.
The H shares should account for no more than 35 per cent of the firm's total share value, including A, B and H shares.
In January 2003, BOE spent US$380 million to buy the thin-film transistor liquid-crystal display (TFT-LCD) unit of South Korea's Hynix Semiconductor Incorporation. It was one of the largest overseas forays made by a Chinese technology firm.
In June last year, BOE established its TFT-LCD G5, the fifth generation of this type of product, production line at its Beijing plant and began mass production this May.
The plant has the most advanced equipment and information management system in the industry. The total investment in the G5 line was US$1.24 billion.
The large overseas purchase and the huge investment in the production line brought heavy debt to the firm. BOE has to pay back large bank loans. Statistics show in the first quarter of this year its debt-assets ratio had increased to 72.29 per cent.
Some market insiders say the regulators might not approve the firm's plan to list in Hong Kong because the liquid-crystal display market has been in a doldrums since the middle of last year.
BOE's profits last year were lower than that in 2003 and in the first quarter this year it suffered a lose.
However, the liquid-crystal display industry is very promising in the long term, said Cai Xiao, an analyst from China Securities.
At the moment, all large-size crystal TV screens in China are imported from abroad.
If BOE can improve its technology and grab this market share, it will enjoy great profit margins in the future, he said.
Moreover, the BOE TFT-LCD G5 line is the biggest TFT-LCD plant in the Chinese mainland, which is supported by China's central government and Beijing municipal government, he said.
Market observers also said the private company has very few non-tradable shares and will not be affected by the on-going share reforms. Issuing H shares will not make the firm's share structure complicated.
(China Daily July 7, 2005)
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