China Glass aims for $207m IPO to fund production boost

Date: 13 June 2005

China Glass Holdings, which is raising up to HK$207 million through an initial public offering, plans to use 93.5 percent of proceeds to add a production line to boost annual capacity by two-thirds, said the company and fund managers.

China Glass, which has an annual production capacity of 748,000 tonnes hopes the new line will add a further 548,000 tonnes.

It also plans to upgrade an existing line next year to make ultra-thin glass of 2 millimeters or less for the automotive and electronics industries.

The firm, which makes glass for buildings and cars, aims to sell 90 million new shares at between HK$1.50 and HK$2.30 each, or 8.83 to 13.54 times its 2004 earnings of 65 million yuan (HK$61.14 million). Bigger mainland rival Zhejiang Glass trades at 5.9 times 2004 earnings.

"The price is not attractive. If the price is set 10 times earnings or below, it will be acceptable," said Charles Chu, senior investment services manager of Pegasus Fund Managers.

Chu is also concerned the firm's earnings may be affected by the central government's austerity measures to curb property speculation and overinvestment in the auto industries.

Still, China Glass has bagged London-listed Pilkington, the world's biggest windshield maker, as an investor, which will buy about 40 percent of the shares, or a 9.9 percent stake, for up to HK$83 million.

To sweeten its offer China Glass plans to pay about 30 percent of profits this year as dividends to shareholders.