UPDATE 1-China's Zhengzhou Coal to launch $350 mln HK offer, as deals grow
* Shares offered at indicative range of HK$10.38 to HK$12.28 each
* Zhengzhou Coal to tap market ahead of PICC Group IPO, Future Land
By Elzio Barreto
HONG KONG, Nov 20 (Reuters) - Chinese equipment maker Zhengzhou Coal Mining Machinery Group Co Ltd is set to launch an up to $350 million Hong Kong stock offering on Wednesday, joining a number of companies lining up to raise funds before the end of the year.
The Shanghai-listed company is offering shares at an indicative range of HK$10.38 to HK$12.28 each ($1.34-$1.58), according to sources with direct knowledge of the plans who were not authorized to speak publicly on the matter.
The price would be equivalent to 6.5 times to 7.7 times Zhengzhou Coal's 2013 forecast earnings.
Zhengzhou Coal is looking to benefit from an uptick in equity capital market activity in Hong Kong as 2012 draws to a close, with companies including People's Insurance Company of China Group (PICC) and Future Land Development Holdings Ltd. testing investors' appetite with nearly $5.2 billion of deals in coming weeks.
The company had started pitching the offering to investors in September, but decided to delay a roadshow and order taking for the offering to get approval from Chinese regulators to offer the stock at a steeper discount from the Shanghai-listed shares, Thomson Reuters publication IFR previously reported.
Zhengzhou Coal's Shanghai-traded shares closed at 9.18 yuan ($1.47) on Tuesday.
Stock issuance in Hong Kong is little changed so far in 2012 from 2011 at about $38 billion, but the year has been a dismal one for IPOs, with issuance down more than 80 percent, according to Thomson Reuters data.
Most of the activity has been from so-called block deals that target institutional investors, including a $6 billion offering of AIA Group stock in March and a $2.5 billion sale of Industrial and Commercial Bank of China shares in April.
On Tuesday, China Resources Gas launched an up to $357 million share offering at a discount of as much as 8.2 percent to its close of HK$18.46, IFR reported. The block deal follows on the heels of a $215 million IPO by real estate developer CIFI Holdings on Friday.
Zhengzhou Coal, whose main clients include China Shenhua Energy Co Ltd , the country's largest coal producer, gets nearly 69 percent of its sales from hydraulic roof supports used to prevent rocks from falling into a coal mine's working area and 23 percent from its steel and raw materials trading business.
The company posted a 1.21 billion yuan profit in 2011 on sales of 8.06 billion yuan, according to a securities filing in Hong Kong. Profits in the six months ended June totaled 832.3 million yuan on sales of 4.72 billion yuan.
Citic Securities International, Deutsche Bank, JPMorgan and UBS were hired to handle the offering.
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