Shares of BBMG Corp rose 3.7 per cent to HK$11.10 yesterday after the mainland cement producer issued its prospectus on its plans to list in Shanghai through a merger.
BBMG would issue 410.4 million A shares at CNY9 (HK$10.60) each, with a total value of 3.69bn, to merge with Hebei Taihang Cement, a Shanghai-listed cement producer, said its prospectus, posted on the website of the China Securities Regulatory Commission (CSRC) yesterday.
All 410.4 million issued shares will be swapped with Taihang Cement’s A shares, where 1.2 BBMG A shares will be swapped with one Taihang Cement A share at 10.80 yuan. The A-share offer price of 9 yuan is 14.37 times BBMG’s forecast earnings in 2010 and 20.43 times BBMG’s 2009 earnings. Taihang Cement minority shareholders have the option to sell their Taihang Cement shares for 10.65 yuan each.
The CSRC will meet to decide whether to approve BBMG’s proposed merger and Shanghai listing on January 21, the website of the securities watchdog said. After the merger, Taihang Cement will cease trading on the Shanghai stock exchange, while BBMG will have a total share capital of 3.11 billion A shares on the Shanghai exchange and 1.17 billion H shares.
"BBMG will double its assets, revenue and profit from 2010 to 2015, and double the average salary of its employees, by leveraging on China’s industrialisation, urbanisation and internationalisation, as well as the growth of the Bohai Gulf region including Beijing and Tianjin," it said in its prospectus.
The combined revenue of Beijing-based BBMG and Taihang Cement was 12.77 billion yuan in 2009 and 8.42 billion yuan in the first half of 2010, while the combined net profit of both companies was 1.97 billion yuan in 2009 and 1.11 billion yuan in first-half 2010.
BBMG forecasts that the combined revenue of BBMG and Taihang Cement will be 22.94 billion yuan in 2010 and grow 42 per cent to 32.58 billion yuan in 2011, while the combined net profit will be 2.89 billion yuan in 2010 and grow 25.6 per cent to 3.63 billion yuan in 2011.
BBMG’s Hong Kong IPO in July 2009 attracted five cornerstone investors, including sovereign wealth fund China Investment Corp, which bought US$35 million worth of stock, and a company controlled by Malaysian tycoon Robert Kuok, which bought US$20 million worth of stock. The Kuok Group is the controlling shareholder of the SCMP Group, which publishes the South China Morning Post.