China Resources may defer listing of cement unit

China Resources may defer listing of cement unit
24 November 2008

China Resources (Holdings) might postpone an initial public offering for its cement operation until early next year in the face of the soured investment climate, said chairman Song Lin.

The company had filed its listing application with the Hong Kong stock exchange and an approval hearing was scheduled for next Thursday, Mr Song said.

"The overall market for initial public offerings has nearly come to a standstill. We are likely to defer the listing to early next year from late this year," said Mr Song, who is also chairman of Hong Kong-listed China Resources Enterprise.

Without disclosing the amount it planned to raise, he said turnover for the cement operation reached six billion yuan (HK$6.81 billion) last year.

Credit Suisse and Morgan Stanley are sponsors for the deal.

The listing plan comes two years after the group privatised China Resources Cement Holdings, which went public in 2003.

Mr Song said the group decided to privatise China Resources Cement in 2006 mainly because the sector was not favoured by investors.

"Today, the cement operation has grown up," he said. "Its current production capacity is five times larger than four years ago."

Demand for cement would be high after many infrastructure projects, such as railways in Guangdong province, got under way, he said yesterday after the grand opening of the company’s serviced apartment project, Fraser Suites, in Wan Chai.

Next year, the group would slow down on new investments in view of uncertainties in the economic outlook, he said. Capital expenditure in the first half would be cut by more than half, he added, without elaborating.

This year, the group had set aside 60 billion yuan for expenditure but had only used 40 billion yuan so far, he said.

Mr Song expected the business environment would become tougher in the first quarter of next year, though the market might improve slightly in the second half.

The group would not be immune to the global financial crisis, he said, adding that turnover for its power, textile and property sectors would decline this year compared with a year ago.

The 28-storey Fraser Suites is owned by Harvest Capital Partners, a property investment fund backed by China Resources (Holdings). Harvest Capital spent HK$85 million to renovate the building into serviced apartments.

The project, comprising 87 units ranging from 566 square feet to 1,010 sq ft each, are offered for HK$29,800 to HK$38,800 per month.
Published under Cement News