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August 19, 2009

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Home » Business » Manufacturing

Train maker seeks US$1b IPO

China CNR Corp, one of China's top two train makers, plans to issue up to 3 billion A shares in a Shanghai initial public offering that could raise roughly US$1 billion.

The Beijing-based firm didn't give pricing details, but said it would use the proceeds to fund 6.43 billion yuan (US$941 million) of projects for technical upgrades so that it could compete with global rivals like France's Alstom SA and Canada's Bombardier Inc.

The shares represent 34 percent of the company's enlarged capital, according to a prospectus posted on the Website of the China Securities Regulatory Commission late Monday.

The regulator said it would review the train maker's IPO application on Friday, and analysts said this indicates the regulator didn't expect the market to become bearish despite the recent slide.

The Shanghai Composite Index has suffered a major correction since early this month and tumbled 5.8 percent on Monday amid concerns about excessive new share supply and a slower growth in loans. The barometer stabilized yesterday, ending 1.4 percent up.

CNR was known as China Northern Locomotive and Rolling Stock Industry (Group) Corp before a reorganization last year. Its domestic rival is Shanghai and Hong Kong-listed China South Locomotive and Rolling Stock Corp.

CNR's net profit gained 40 percent to 1.27 billion yuan last year from a year earlier, and sales rose 31 percent to 34.7 billion yuan, its prospectus said, as it benefited from the world's fastest growing major railway market.

Major contracts won by CNR include a 39.2 billion yuan deal by the Ministry of Railways in March to supply 100 new-generation bullet trains for the planned high-speed railway line between Shanghai and Beijing.


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