China Hongqiao targets US$1.5 billion from share sale in Hong Kong amid aluminium boom

China Hongqiao Group, the country's largest backstage aluminium producer, aims to rise HK$11.68 cardinal (US$1.5 billion) from a stock merchantability to money projects and repay debt, capitalising connected robust manufacture margins and a buoyant Hong Kong equity market.

The institution planned to merchantability up to 400 cardinal existing shares for HK$29.20 each, representing a 9.6 per cent discount to its closing terms connected Monday, according to a filing to the Hong Kong banal speech connected Tuesday.

"In presumption of the existent superior marketplace conditions, the committee considers the placing and the subscription correspond a bully accidental for the institution to rise further superior for the company, portion astatine the aforesaid clip broadening its shareholder and superior base," the filing said.

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Its shares slumped 7.7 per cent to HK$29.80 successful aboriginal trading, trimming its summation to 153.4 per cent this year.

Aluminium is presently trading adjacent a three-year precocious acknowledgment to coagulated request and measured supply. Photo: AFP alt=Aluminium is presently trading adjacent a three-year precocious acknowledgment to coagulated request and measured supply. Photo: AFP>

The placed shares would relationship for astir 4 per cent of China Hongqiao's enlarged stock capital, according to the filing. The institution added that the connection terms marked a premium of astir 2.2 per cent to the mean closing terms of astir HK$28.58 per stock implicit the past 30 trading days.

The fundraising comes amid rising margins for the metal, with aluminium trading adjacent a three-year precocious acknowledgment to coagulated request and measured supply.

"Aluminium remains 1 of our astir preferred sectors arsenic we expect proviso to stay choky benefiting from China's capableness headdress argumentation and the lack of explosive capableness summation successful Indonesia, resulting successful higher-for-longer aluminium margins," Citigroup expert Jack Shang said successful a enactment earlier this month.

The US slope raised China Hongqiao's 12-month people terms to HK$36 from HK$25.20, citing higher margins, superior profitability and an charismatic shareholder instrumentality policy, arsenic good arsenic the management's cautious stance connected the company's Indonesian task expansion.

China Hongqiao, Shandong Nanshan Aluminium and Tsingshan Holding Group are among the Chinese producers turning to the aluminium manufacture successful Indonesia, Southeast Asia's largest economy, with multibillion-dollar projects.