HONG KONG - Sany Heavy Industry Co and CITIC Securities Co are pushing ahead with sharesales in Hong Kong, where companies have canceled or delayed a record $14 billion of equityofferings this year as stock markets tumble.
Sany Heavy will raise up to HK$26 billion ($3.3 billion), according to a term sheet. CITICSecurities is marketing a $1.9 billion share sale after attracting early investors includingTemasek Holdings Pte and Kuwait Investment Authority, people with knowledge of the deal saidon Sept 16.
The two companies are braving a market where investors have lost money on 37 of the 48companies that started trading this year and equity sales are on track for the slowest thirdquarter since 2008.
Sany Heavy and CITIC Securities may still appeal to investors speculating on the mainland'seconomic growth, said fund manager Binay Chandgothia of Principal Global Investors.
"Sany is the biggest machinery maker on the mainland and CITIC Securities is the biggestbrokerage, so both are providing a compelling investment case," said Hong Kong-basedChandgothia, whose company oversees more than $200 billion. "Other companies may have toprice shares cheap or struggle to get things done in such a market environment."
Shanghai-listed shares of Sany Heavy, which is raising money to expand production lines, havegained about 4 percent this year while CITIC Securities dropped 4.5 percent.
Sany Heavy is offering 1.34 billion shares at HK$16.13 to HK$19.38 a share, according to theterm sheet.
Pricing at the middle of the range would value Sany Heavy at 12.5 times estimated 2011 profit,a premium to Hong Kong-listed shares of Changsha Zoomlion Heavy Industry Science andTechnology Development Co, according to Bloomberg data.
Zoomlion, the second-biggest mainland machinery maker by market capitalization, trades at10.2 times forecast 2011 profit, the data showed.
XCMG Construction Machinery Co, which trades in Shenzhen, became the latest casualty of theequities rout as it delayed a stock sale of as much as $1.5 billion, people with knowledge of thematter said on Sept 16.
XCMG's delay means almost $12 billion of share sales have been withdrawn or postponedsince May, as the benchmark Hang Seng Index plunged 18 percent.
China Everbright Bank Co scrapped a $6 billion Hong Kong offering in August, havingconsidered cutting the size of the sale in half.
"The IPO market is slowing down as it takes time for companies to adjust their pricingexpectations following recent stock market declines," said Will Li, head of equity capital marketsfor China at Deutsche Bank AG in Hong Kong.
Successful offerings by Sany Heavy and CITIC Securities "would give the market a dose ofencouragement", he said.
The Bloomberg Hong Kong IPO Index, which measures the first-year performance of newstocks, is down 19 percent this year, as Europe's debt crisis and evidence of a slowdown in theUS economy have driven investors out of stocks.
Also proceeding with offerings this week are Tenfu (Cayman) Holdings Co and Xiao Nan GuoRestaurants Holdings Ltd. The two plan to price IPOs worth as much as a combined $277million on Sept 20.
Last week, iron ore miner China Hanking Holdings Ltd revived plans to raise about $170 million.
Hanking, which delayed its IPO in June, is scheduled to meet investors this week, two peoplewith knowledge of the matter said.
