BBMG 2009

[winston]

BBMG lures US$20b from institutions by Mandy Lo, The Standard HK

BBMG Corporation attracted over US$20 billion (HK$156 billion) from institutional investors, which makes the international tranche of its HK$5.95 billion offering oversubscribed by 28 times, a source close to the deal said yesterday.

The retail book of the leading building material maker in China opens from today to next Wednesday. It is set to go public on July 29.

Lenders slashed the lending rate for margin financing for BBMG as Hang Seng Bank (0011) cut the rate to between 0.5 percent - the lowest ever - and 1 percent per annum.

HSBC is charging 1.88 percent and Dah Sing Bank 2 percent. Dah Sing also cut its subscription service charge by half to HK$50.

BBMG will reap net proceeds of HK$5.03 billion, assuming the offer price is set at HK$5.78.

About 75 percent of the proceeds will finance expansion including the acquisition of a Beijing cement plant for HK$1.71 billion and the building of social housing units for HK$1.56 billion.

BBMG yesterday said it would float 933.33 million shares at HK$5.18 to HK$6.38 each, which is 12.91 times to 15.9 times its earnings per share reported for the year ended December 31.

Driven by the hot sentiment for newly-listed stocks, China Metal Recycling (0773) leaped 6.89 percent to a record HK$7.14, up 37.8 percent from its offer price of HK$5.18. Lumena Resources (0067) rose 6.39 percent to HK$2.83, the highest since its listing on June 16 at HK$2.

[winston]

From Phillips:-

Valuation

As core businesses of BBMG are cement as well as property development, we have compared the valuation with cement and property developer peers. At present, cement peers are trading around 11-13x times of 2010E EPS, whereas property developers are trading at a higher P/E, which is 14-18x times of 2010E EPS.

We set the reasonable 2010E P/E to be 14x that is the median value of these 2 business segments. 2009E EPS and 2010EPS are estimated to be RMB 0.41 and RMB 0.52 respectively.

12-month target price is HK$ 8.23 implying 2009E P/E to be 17.8x and 2010E P/E to be 14x.

Risk

1) Slower-than-expected recovery of the property market
2) Raw material and energy price increase at a faster pace
3) Industry consolidation slows down
4) Unexpected decrease of FAI

[winston]

BBMG Raises $763 Million in Popular Hong Kong IPO By AMY OR

HONG KONG -- Chinese building materials producer BBMG Corp. raised US$763 million in a Hong Kong initial public offering, after attracting an overwhelming US$85 billion worth of subscriptions from investors, a person familiar with the situation said Thursday.

The offering by BBMG is the second-largest IPO in the Asia-Pacific region this year, after the US$1.27 billion April IPO by another Chinese building materials company, China Zhongwang Holdings Ltd.

The Beijing-based BBMG sold 933.33 million shares, or 25% of its enlarged share capital, at 6.38 Hong Kong dollars (82 U.S. cents) a share, the top end of its HK$5.18 to HK$6.38 indicative price range, the person said.

The retail tranche of the highly sought-after IPO was 750 times covered, the person said. The amount of subscriptions BBMG drew was a record this year.

The huge amount of subscriptions triggered a so-called clawback, which increased the portion of shares allocated to retail investors to 50% of the offering from an original allotment of 10%.

The institutional tranche, before the clawback came into effect, was more than 60 times covered, the person added. The orders included US$175 million from five cornerstone investors.

Those five were China's sovereign-wealth fund China Investment Corp., which subscribed to US$35 million worth of shares; China Life Insurance (Group) Co. and a unit of Bank of China Ltd., which each took up US$50 million worth of shares; and Och-Ziff Capital Management LLC and a company controlled by Malaysian tycoon Kuok Hock Nien, which each bought US$20 million worth of shares.

The HK$6.38 IPO pricing translates to a price/earnings ratio of 13 times the company's forecast 2009 net profit of 1.63 billion yuan (US$240 million).

The multiple is at a slight discount to smaller peer Asia Cement (China) Holdings Corp., which also supplies cement for construction and trades at 17 times.

But the valuation gap widens when compared with two other Hong Kong-listed peers, Anhui Conch Cement Co. and China National Building Materials Co.

Anhui Conch is trading at a price/earnings ratio of 31 times and CNBM at 22 times.

BBMG, the largest cement supplier in Beijing by sales, supplied more than 90% of the cement for venues built for the 2008 Beijing Olympics, including the National Stadium and the National Aquatics Center.

The company's cement and building materials division accounted for 70% of its 8.55 billion yuan in revenue last year, while its property development business contributed 30%.

BBMG plans to list on the Hong Kong stock exchange on July 29.

J.P. Morgan Chase & Co., Macquarie Group Ltd., and UBS AG are the underwriters of the IPO.

[eauyong]

BBMG (02009) debuts at $10.2, up 59.87%
09:52
Infocast

(Infocast News) BBMG Corporation (02009) debuted this morning at $10.2, up $3.82, or 59.87%, over the offer price per share of $6.38.

The Chinese building materials maker had offered 933.3 million H shares at a
range of $5.18-6.38 per share.

[winston]

BBMG steps up land purchases by Derek Yiu, The Standard HK

BBMG (2009) is spending up to 2 billion yuan (HK$2.27 billion) to buy land, mainly in Beijing, in the second half of the year.

The cement and building materials manufacturer has stepped up the purchase of inexpensive sites for its own use, paying more than 1 billion yuan for 1.26 million square meters in the first half.

Its current land bank of 3.88 million sqm - mostly in Beijing, Hangzhou and Hohhot - is expected to be sufficient for two to three years.

The company's capital expenditure for the second half, excluding land acquisitions, is 3.67 billion yuan.

President Jiang Dewei said the company will continue to benefit from large government spending on infrastructure. BBMG has won tenders for a number of infrastructure projects in Beijing, Tianjin and Hebei province. The firm expects cement demand to remain robust because of the property market boom.

Jiang said BBMG intends to raise its cement production capacity to 30 million tonnes from 20 million tonnes by the end of 2010, adding that Beijing faces a cement shortage of roughly 10 million tonnes.

"Excess supply in a particular region will not necessarily imply the situation is the same elsewhere," said chairman Jiang Weiping.

The chairman said transporting cement over 200 kilometers is very expensive. As such Hebei will benefit as a transportation hub for resources, including water, from central China while Beijing will play a similar role for the north and east of the country.

The group currently has no plans to issue A shares.

[winston]

Initiated a position today.

DJ MARKET TALK: Macq Starts BBMG At Outperform; HK$9.50 Target

1219 [Dow Jones] STOCK CALL: Macquarie starts BBMG (2009.HK) at Outperform, target price of HK$9.50 represents 17.3X FY10 P/E of, based on forward P/E range of 16X-18X, which reasonable given cement, property comparatives.

"BBMG is neither a pure cement play nor a pure property play," thus applies SOTP methodology to derive target price. House however notes number of country-, company-specific risks; in terms of cement, building materials businesses, says there are risks construction market in north doesn't grow at forecast rates; there are also risks associated with fast expansion of these businesses.

While property business exposed to "very uncertain" market place in terms of total China property, specific markets.

[winston]

Added to my position yesterday ..

DJ MARKET TALK: UBS Starts BBMG At Buy; Target Price At HK$10.55

1134 [Dow Jones] STOCK CALL: UBS starts BBMG (2009.HK) at Buy with target price of HK$10.55. By consolidating its cement operations in Beijing, Tianjin, and Hebei, says BBMG has not only delivered strong volume growth, but also maintained reasonably high margins.

Adds its state-owned background and abundant industrial land resources have helped it become leading property business consolidator in Beijing. Tips its recurring net profit to achieve 2008-11 CAGR of 75%.

Source: Dow Jones Newswire

[winston]

Vested.

Financial Statements - [Interim/Half-Year Report]
Interim Report 2009

http://www.hkexnews.hk/listedco/listcon ... =000865710

[winston]

Vested.

DJ MARKET TALK: JPM Ups BBMG Corp To Overweight; HK$10.30 Target

1258 [Dow Jones] STOCK CALL: JPMorgan upgrades BBMG Corp (2009.HK) to Overweight from Neutral, raises target price to HK$10.30 from HK$9.50 after revising up earnings estimates by 9%-17% in 2009-10 to reflect better industry outlook.

Broker expects company to benefit from rising housing prices in northern China and conversion of economic-housing into price-cap housing, ASP of which can be twice as high. Notes risks to target include worse-than-expected demand, earnings growth in both cement and property businesses.

Source: Dow Jones Newswire

[winston]

Ha Ha .. Shopping Day.

I also picked up some BBMG today. PE 11. IPO price HK$6.38.

Shortage of Cement in BJ and they would have another facility late next year.

Again, follow me at your own risk. I'm range trading as I dont expect a crash.