Hopewell Holdings Ltd, seeking to raise US$466 million selling shares in its China toll-road business, said the unit's profit will rise by at least a third this year, helped by the booming economy in China's Pearl River Delta region.
Hopewell Highway Infrastructure Ltd, owner of one of south China's busiest toll roads, will post at least HK$700 million (US$89.8 million) net income in the year ending next year June 30 from a minimum HK$522 million the company probably earned in the previous year, Hopewell Holdings said in a statement.
Hopewell Highway is selling 720 million shares, or 25 percent of itself, in Asia's second-biggest initial public offering outside Japan this year, and the first Chinese toll-road listing in six years.
The sale is a test of investor confidence in 67-year-old Hong Kong tycoon Gordon Wu, who chairs Hopewell Highways and parent Hopewell Holdings, which has property, power and hotel businesses.
Hopewell Highway is betting a dividend payout of at least 75 percent of its profit and the growth offered by increasing affluence and car ownership in southern China will be enough to lure buyers to the stock.
Company executives will meet investors July 14 and the shares are to start trading in Hong Kong on Aug. 6, people involved in the sale said earlier this month.
Hopewell's Guangzhou-Shenzhen Superhighway, which competes with the Huiyang Expressway and National Highway 107, offers investors the opportunity to invest in the western part of the Pearl River delta.
The delta region grew 13.4 percent in 2001, surpassing the growth rate of Guangdong province, according to Citigroup Inc, the stock sale's arranger. Guangdong is one of China's richest provinces.
Wu needs funds to help finance his planned 29-kilometer bridge connecting Lantau Island in Hong Kong to Macau and Zhuhai at an estimated cost of HK$15 billion. Hopewell Highway plans to use proceeds from the share sale to build roads, bridges and tunnels and to repay loans.
Hopewell Holdings posted profit of HK$178.5 million in the six months ended Dec. 31, on sales of HK$446.6 million.