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Old 12-05-2007, 08:56 AM   #4
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Default Sinotruk launched in HK stock market

Source: Shanghai Daily
SHARES of Sinotruk (Hong Kong) Ltd plunged on the first trading day of its initial public offering in Hong Kong yesterday, possibly due to an overvalued price. China’s largest maker of heavy-duty trucks dropped 15.6 percent to close at HK$10.86 (US$1.39) yesterday compared with its float price of HK$12.88, the top of the company’s initial price range.

The flat debut came after the initial offer was oversubscribed by institutional and individual investors. The Ji’nan, Shangdong Province-based truck maker raised a record high of HK$9 billion yuan after selling 702 million new shares, accounting for 32 percent of its capital.

Hong Kong individuals applied for more than 300 times the number of stock initially set aside for them, while demand from international institutions was about 50 times the available shares.

"The drop is within market expectation because the IPO price is overvalued amid an earlier market boom," said Xia Ping, auto analyst from Core-Pacific Yamaichi International (HK) Ltd, an investment banking firm. "But the strong fundamentals will still support the stock in the long term," Xia added.

Ma Chunji, chairman of Sinotruk, declined to comment on the price slump, reiterating the HK IPO would benefit the company’s long-term development in the auto industry on both domestic and overseas markets, according to yesterday.

The sale proceeds will be used to fund production expansion, technology upgrades as well as research and development , Sinotruk said in its share-sale document.

The Chinese partner of Volvo AB earlier announced it will invest 800 million yuan by 2010 to double its capacity, thanks to China’s rapidly growing economy and increase in fixed assets. It aims to sell 125,000 heavy-duty trucks by 2010, of which one-third will be exported to overseas markets, Sinotruk’s Ma said earlier.

Sinotruk also has a Shenzhen-listed subsidiary, which also lost 3.2 percent yesterday to 46.82 yuan.
"It took Japan 40 years to become a great automotive nation. It took South Korea 20 years. I think it will take China as little as 10 to 15 years."

Giorgetto Giugiaro
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