Inner Mongolia Yitai Coal Co. (900948), the biggest coal producer in the Chinese region bordering Mongolia, may cut the size of a planned Hong Kong share sale by a third, said two people with knowledge of the matter.
Yitai Coal, which already has dollar-denominated B shares listed in Shanghai, may sell stock in Hong Kong equivalent to 10 percent of its equity capital after the offer, said the people, who declined to be identified because the details are private. The company had planned to sell 15 percent of its enlarged capital, they said.
A sale of 10 percent would raise about $820 million, based on Yitai Coal’s closing price in Shanghai yesterday. The company’s shares advanced 2 percent this year as of yesterday, giving it a market value of $7.34 billion.
Hong Kong is mired in its weakest market for share sales since 2009, as Europe’s credit crisis and China’s slowing economy crimps demand for new equity. Sany Heavy Industry Co., China’s biggest machinery maker, cut the size of a planned share sale in the city to about $2 billion, people with knowledge of the matter said on May 30.
Yitai Coal has yet to set a price range or a final number of shares for the offering, the people said. The company may start trading in Hong Kong as early as the last week of June, they said. BOC International Holdings Ltd., China International Capital Corp., Bank of America Corp., BNP Paribas SA and UBS AG are managing the sale, the people said.
Jian Qing’e, secretary of the board for Yitai Coal in Ordos in Inner Mongolia, declined to comment.
Yitai Coal is gauging investor demand for its offer with a tentative valuation of about 8.5 times estimated full-year profit, the people said. The company trades at about 7.8 times forecast 2012 earnings in Shanghai, according to data compiled by Bloomberg. China Shenhua Energy Co. (1088), the country’s biggest listed coal producer, trades at about 8.5 times estimated 2012 profit, the data show.
Inner Mongolia has the biggest coal reserves among Chinese provinces, with about 700 billion tons at the end of 2008, according to the regional government’s website.
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