A man walks past Zoomlion machines in Beijing. Zoomlion's board of directors has approved the plan to list shares in Hong Kong. [China Daily]
Share sale to raise up to 6b yuan, aid company's global ambitions
SHANGHAI: Changsha Zoomlion Heavy Industry Science and Technology Development Co, the nation's third-largest machinery maker by market capitalization, said on Wednesday it plans to list shares in Hong Kong.
In a statement to the Shenzhen Stock Exchange, Zoomlion said the company's board of directors has approved the plan. Shares sold publicly in Hong Kong may account for as much as 15 percent of Zoomlion's outstanding shares after the listing.
The capital raised will be used to expand the company's international business, accelerate its globalization strategy, upgrade its hardware and improve Zoomlion's capital flow, according to the statement.
"The decision to list in Hong Kong will not only help the company finances in the Asian financial hub, but also promote its brand in the international market," said Dong Yaguang, an industrial analyst with Sinolink Securities.
Dong expects the IPO to raise 6 billion yuan ($890 million) in the Hong Kong capital market. "The money will make Zoomlion's financial situation even better, so that it may withstand any risks that occur," said Dong.
To become a global machinery manufacturer is high on Zoomlion's agenda, said Chu Yanhui, an analyst from Aijian Securities.
"Even during the worst time of the global financial crisis in late 2008, Zoomlion purchased 60 percent of Italy's Compagnia Italiana Forme Acciaio SpA (CIFA) for 163 million euros ($205 million), an ambitious step to go abroad for further development," said Chu.
Zoomlion will be the latest in a series of mainland companies to conduct overseas listings.
In late April, construction machinery manufacturer Sany Heavy Industry Co Ltd announced its IPO in Hong Kong with the issuing of up to 260 million shares.
"Chinese companies that have a dominant position in the domestic market are looking outside to boost their presence worldwide, and a listing in Hong Kong is the best springboard to the global capital markets," said Chu.
Although still lagging behind major rivals like US giant Caterpillar and Japan's Komatsu in terms of equipment manufacturing and sales networks, China's heavy industry brands possess great advantages in terms of their huge domestic market potential and State support.
"There won't be a better time for them to go out as all assets are undervalued overseas and their foreign rivals are still struggling to recover," said Dong.
In a separate statement, Zoomlion said its first-half net income may increase between 50 and 100 percent from a year earlier to 1.63 billion yuan and 2.17 billion yuan.
Zoomlion shares soared 10 percent to their daily limit and closed at 18.84 yuan in Shenzhen on Wednesday, while the Shenzhen Component Index rose 1.31 percent to 9485.43 points.
