Chongqing Machinery and Electric Company plans to raise HK$1.7 billion in an initial public offering (IPO) in Hong Kong, in a bid to fuel its growth supported by the country's need for machinery products.

The executives told a press conference yesterday that the company, which has benefited a lot from China's fast-growing economy, could not produce enough machinery and electric parts and tools to match the market demand.

"The biggest problem we are facing now is our production capacity is lagging behind the market's need. We hope to provide our customers with as good and many products as they expect," said He Yong, president and executive director with the Chongqing-based company.

The group is embarking on making commercial vehicle parts, power equipment, general machinery and machine tools and its products have big demands from all sectors of industries, and the company recorded over 30 percent annual growth for the last three years.

Chongqing Machinery and Electric, which is one of China's largest gear-producing machine producers, hopes to use the IPO proceeds to expand capacity and fund general operation.

Chongqing Machinery and Electric is offering 1.7 billion H shares with about 90 percent earmarked for international buyers and the rest for Hong Kong retail investors.

The offering price ranges from HK$1.30 to HK$1.70 per share. The Hong Kong public offer commences at 9am today and is expected to close at 12am next Wednesday.

The machinery group is scheduled to start trading its H shares on the mainboard of the stock exchange on June 13. Credit Suisse is the sole coordinator and sponsor.

Miao Xiaoping, financial controller of the company, said the group has 1 billion yuan cash in hand by the end of 2007, and its "healthy" balance sheet reflects the company's robust financial condition.

The continuing rapid growth of China's economy, industrialization and urbanization keep driving up the market's demand for vehicle parts and components, power equipment, general machinery and machine tools, the company said in its IPO document.

"The company's market position in western China takes advantage of the growth driven by the government's 'go west' policy and provides a platform to develop market presence throughout China," said Sun Nengyi, chairman and executive director of the group.

"Under the favorable macro-economy, the company is confident that it will sustain an organic development with big strides," Sun said.

(HK Edition 05/30/2008 page3)