Sany Heavy Industry Co. (600031), China’s biggest machinery maker, postponed a $2 billion share sale in Hong Kong after struggling to attract investors, two people with knowledge of the matter said.
The company, which had planned to start marketing shares this month, may instead revive the offering next year, said the people, who asked not to be identified as the information is private. Investors were reluctant to subscribe for stock at valuations acceptable to Sany Heavy, the people said.
With large Chinese companies delaying share sales in Hong Kong, the average size of first-time offerings in the city has fallen to a nine-year low, according to data compiled by Bloomberg. China Everbright Bank Co., People’s Insurance Company (Group) of China and Inner Mongolia Yitai Coal Co. (900948) have reduced or postponed offerings. Among the four, only Yitai Coal has completed its sale.
Sany Heavy, based in Changsha city and already traded in Shanghai, has lowered its sales forecast for excavators as slowing economic growth and government property market curbs sap demand, Vice Chairman Xiang Wenbo said in an interview on July 11. The company has completed preparations for the stock offer and was waiting for the “right time” to start it, he said last week, without providing a timetable for the offering.
Sany Heavy’s board secretary Xiao Youliang didn’t answer calls to his mobile phone seeking comment on the deal’s timing.
The company tried to raise as much as $3.3 billion in Hong Kong in September last year by selling 1.34 billion shares. That offering was postponed amid a stock market rout that left Sany Heavy’s shares down 11 percent that month. Sany Heavy then lowered its fundraising target to about $2 billion and planned to sell stock equivalent to about 10 percent of its enlarged share capital, people with knowledge of the matter said in May.
Unit sales of excavators may increase 10 percent this year, slower than a previous target of 40 percent, Xiang said in the interview last week. Sany will still outperform the industry, which may see a fall in demand, he said.
“Given the low utilisation of existing construction machinery fleet in addition to the measured pace of fiscal and monetary easing, we believe sales recovery is still far out and will be modest when it happens,” Song Yang, an analyst at Credit Suisse AG, said in a note to clients yesterday.
Companies have raised an average $132 million in first-time offers in Hong Kong so far in 2012, the lowest since 2003 and down from $300 million last year, data compiled by Bloomberg show. With share sales totaling $5.4 billion, 2012 is on track to be the slowest year for equity fundraising since 2009, the data show.
Everbright Bank, which shelved a $6 billion Hong Kong offering last August, cut its fundraising target to about $2 billion and planned to restart the deal this month, people with knowledge of the matter said. The company has delayed the sale again, the people said.
PICC, which had planned a $5 billion initial public offering in Hong Kong and Shanghai for this month, delayed the sale to September at the earliest, people with knowledge of the matter said.
Yitai Coal, the biggest coal producer in the Chinese region bordering Mongolia, raised $900 million in Hong Kong this month after cutting its fundraising target from $1.5 billion.
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