HONG KONG, Feb 18 (Reuters) - Weichai Power Co Ltd, a diesel engine maker that is raising up to HK$1.19 billion (US$152.56 million) from a Hong Kong initial public offering, plans to use proceeds from the deal to boost production capacity.
The state-backed company, based in China's eastern Shandong province, plans to build a new production line that will increase capacity by 30,000 units a year, according to a preliminary listing document seen by Reuters on Wednesday.
Weichai sold over 80,000 engines last year, most of which were used in trucks, coaches and construction machinery.
The company and its bankers, led by CITIC Capital and CLSA, kicked off an investor roadshow for the share sale in Hong Kong on Wednesday. The stock is expected to make its debut on Hong Kong's main board on March 11.
Weichai and many other Chinese firms are rushing to the Hong Kong market to raise funds as they take advantage of a buoyant stock market and strong investor interest in China.
Semiconductor Manufacturing International Corp, China's largest chip maker, will hit the road next week as it begins marketing an IPO that could raise as much as US$1.5 billion.
Weichai is selling 110 million shares, or 35 percent of its enlarged share capital, at an indicative price range of HK$6.65 to HK$10.80 each.
That implies a historical price-to-earnings multiple of eight to 10.8 times, based on Weichai's net profit of 277.47 million yuan (US$33.5 million) last year.
Weichai was set up in late 2002 when state-owned Weichai Factory injected its operating assets and cash into the company, which also received cash contributions from other investors.
(US$1=HK$7.8=8.28 yuan)