Asia Cement seeks HK$2.4b fund to pursue expansion on mainland

Asia Cement seeks HK$2.4b fund to pursue expansion on mainland
Published: 29 April 2008

Asia Cement (China) Holdings Corp, the mainland unit of Taiwan’s second-largest cement maker, is raising as much as HK$2.42 billion in an initial public offering in Hong Kong to fund its expansion in the mainland’s booming infrastructure market.
 
"The mainland infrastructure sector has been growing rapidly and demand for cement will remain high. Asia Cement’s operation in China will be surely lucrative in such an environment," said Yiu Chin, a director of financial analysis at Altruist Financial Group.
 
The Taiwanese-managed company, which is offering 375 million shares at between HK$4.85 and HK$6.45 each, began its institutional roadshow yesterday and is expected to open retail subscription next Monday. Its shares will debut on the main board on May 20 under the stock code 743.
 
The firm’s prospectus obtained by a fund manager says Asia Cement expects to raise HK$2.02 billion if it prices the shares at HK$5.65 each, the midpoint of the indicative range.
 
The company plans to earmark 51 per cent of the net proceeds for plant expansions in Jiangxi, Hubei and Sichuan provinces. It will also set aside 22 per cent for strategic acquisitions and investments and use 17 per cent to repay loans. The remaining 10 per cent would go to general working capital, the prospectus said.
 
"Asia Cement’s businesses are focused on the central Yangtze River and the southwest regions, both of which have recorded rapid growth in infrastructure over the past few years," said Kenny Tang Sing-hing, an associate director of Tung Tai Securities.
 
"This [growth] allows cement makers like Asia Cement to reap more profits."
 
With its principal factories in Jiangxi, Sichuan and Hubei, Asia Cement’s output of four major products - cement, clinker, ready-mix concrete and blast-furnace slag powder - reached 8.2Mt, 5.72Mt, 811,000t and 1.29Mt respectively last year.
 
The volumes increased from 5.77Mt, 3.63Mt, 498,000t and 1.06Mt in the previous year.