Sinotruk puts Hong Kong IPO into gear

　Sinotruk, China’s third-largest heavy-truck manufacturer, will begin marketing its $1.16bn (£556m) initial public offering in Hong Kong on Monday, ahead of a trading debut expected this month.

　　The company, which predominantly makes large-tonnage cargo trucks, is hoping to sell 702m shares at HK$10-HK$12.88 each, according to people familiar with the deal. This would account for 32 per cent of the company’s enlarged share capital and would value the company at up to $3.6bn.

　　Eight key investors, including Hong Kong tycoon Li Ka-shing, Singapore state investment vehicle GIC, and the investment arms of Bank of China and insurer China Life, have each committed to purchasing $25m of shares.

　　Sinotruk declined to comment on the offering, as did JPMorgan and China International Capital Corp, which are believed to be the sponsors.

　　China’s truck manufacturing industry has grown rapidly in the past few years on the back of high fixed-asset investment. Heavy truck sales in the first nine months of the year have surpassed those for the whole of last year, according to government data.

　　China’s truck manufacturing industry has grown rapidly in the past few years on the back of high fixed-asset investment. Heavy truck sales in the first nine months of the year have surpassed those for the whole of last year, according to government data.ruck had an 18.5 per cent share of that market in 2005, up from 12.1 per cent in 2004, according to research by Bank of China International. Sinotruk, based in the eastern province of Shandong, has the capacity to manufacture 70,000 trucks and 100,000 engines per year. The funds raised will be used to increase its truck manufacturing capacity by more than half by 2010.

　　Sinotruk has a truck manufacturing joint venture with Volvo, the world’s second-largest truck maker.The proposed IPO price would be around 14 to 19 times estimated 2008 earnings, about the same as its larger rival, Hong Kong-listed Dongfeng Motors.

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