HONG KONG: BBMG Corp surged 56 percent on its first day of trading in Hong Kong on expectations Beijing's $586 billion stimulus spending will spur asset investments and housing demand.

BBMG, top cement supplier in the nation's capital, closed at HK$9.97, up from the offer price of HK$6.38, as retail investors in Hong Kong applied for about 775 times the shares available in the city's second-biggest offering this year. The company raised HK$5.95 billion ($767 million).

Urban fixed-asset investment on the mainland soared 34 percent in the first half, the most in five years, and Beijing yesterday unveiled plans for a financial district funded by 60 billion yuan ($8.8 billion) of debt. Public works spending helped lift second-quarter economic growth to 7.9 percent.

Carmen Wong, an analyst at Phillip Securities Group, estimates that BBMG, which also develops and owns properties in Beijing, is valued at about 22 times forecast earnings. Anhui Conch Cement Co, China's largest maker of the construction material, trades at 24.46 times estimated earnings in Hong Kong, according to data compiled by Bloomberg.

China State Construction Engineering Corp, the nation's biggest homebuilder, jumped 56 percent today on its debut in Shanghai as confidence in the economic recovery stoked demand for the world's largest offering in 16 months.

BBMG, which supplied more than 90 percent of the building material used in the National Stadium and the National Aquatics Center for the Olympics, recorded a profit of 1.32 billion yuan last year, more than doubling from 2007.

"The deal highlights the current strength of the local capital markets," Raymond Li, a partner at Paul, Hastings, Janofksy & Walker, said yesterday in an e-mailed statement. The law firm represented BBMG in the offering. JPMorgan Chase & Co., Macquarie Group Ltd. and UBS AG arranged the share sale.

"Cement prices are expected to rise in the fourth quarter as demand for housing and infrastructure projects in China increases demand for the material," said Michelle Leung, an analyst at CIMB-GK Securities (HK) Ltd. She has an "overweight" rating on the industry.

China Investment Corp, the country's $200 billion sovereign fund, and four other investors including US hedge fund OZ Management LP and China Life Insurance (Group) Co bought $175 million worth of shares, according to BBMG's prospectus.

Bloomberg News

(HK Edition 07/30/2009 page4)