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China carmaker Great Wall does not plan '03 divi

By Vicki Kwong

HONG KONG, Nov 27 (Reuters) - Great Wall Automobile Holding Co Ltd, a Chinese truck and sport-utility vehicle maker that is raising up to HK$1.53 billion (US$195.85 million) in a Hong Kong share sale, does not plan to pay a dividend for this year.

However, the company intends to distribute about 30 percent of its profits as dividends in the "foreseeable future," it said in a preliminary listing document seen by Reuters on Thursday.

Great Wall expects to post a net profit of at least 512 million yuan (US$61.84 million) this year, which would be a 74 percent surge from 2002.

The company, based in China's northeastern province of Hebei, plans to use proceeds from the IPO to boost its annual production capacity to 150,000 vehicles by 2005 from 70,000 currently.

Great Wall has started building new production facilities in Hebei that are expected to cost about 880.2 million yuan, according to the listing document. The company will fund the investment with proceeds from the IPO and internal resources.

Great Wall and its bankers, led by BNP Paribas Peregrine, met fund managers in Hong Kong on Thursday to market the share sale.

Trading in the company's shares is expected to begin on Hong Kong's stock exchange on December 15, banking sources said.

Great Wall's market debut will come just a few days before that of China Life, the mainland's dominant life insurer, which is scheduled to list in Hong Kong on December 18 after an IPO that could raise up to US$2.5 billion.

New listings on the Hong Kong bourse, largely from Chinese issuers, have picked up in recent months after a relatively quiet start to the year, when the SARS outbreak hurt market sentiment.

Great Wall is selling 114 million shares, or a quarter of its enlarged share capital, at an indicative price range of HK$10.05-HK$13.40 apiece, sources have said.

The price range represents about 9.5 to 12.6 times Great Wall's expected earnings for 2003, which would be make its shares cheaper than those of its Hong Kong-listed peers.

Denway Motors Ltd , the Chinese joint venture partner of Japan's Honda Motor Co , is trading at about 17.9 times forecast 2003 profits, according to Reuters Research.

China's largest minivan maker Brilliance China Automotive Holdings Ltd , which also makes sedans under its own brand and through a tie-up with Germany's BMW AG , trades at about 13.9 times forecast 2003 earnings.

Unlike many mainland carmakers, Great Wall does not have a joint venture partnership with a foreign manufacturer.

The privately-owned company says it was the largest pick-up truck maker in China last year, and the third largest seller of sport-utility vehicles.

Total vehicle sales in China are expected to jump by 32 percent this year to 4.3 million units according to the China Association of Automobile Manufacturers, as China's booming economy continues to grow at a rapid pace.

(US$1=HK$7.8=8.28 yuan)