Yitai Coal Said to Weigh Cutting Hong Kong Stock Sale by a Third

Inner Mongolia Yitai Coal Co. (900948), the
biggest coal producer in the Chinese region bordering Mongolia,
may cut the size of a planned Hong Kong share sale by a third,
said two people with knowledge of the matter.

Yitai Coal, which already has dollar-denominated B shares
listed in Shanghai, may sell stock in Hong Kong equivalent to 10
percent of its equity capital after the offer, said the people,
who declined to be identified because the details are private.
The company had planned to sell 15 percent of its enlarged
capital, they said.

A sale of 10 percent would raise about $820 million, based
on Yitai Coal’s closing price in Shanghai yesterday. The
company’s shares advanced 2 percent this year as of yesterday,
giving it a market value of $7.34 billion.

Hong Kong is mired in its weakest market for share sales
since 2009, as Europe’s credit crisis and China’s slowing
economy crimps demand for new equity. Sany Heavy Industry Co.,
China’s biggest machinery maker, cut the size of a planned share
sale in the city to about $2 billion, people with knowledge of
the matter said on May 30.

Yitai Coal has yet to set a price range or a final number
of shares for the offering, the people said. The company may
start trading in Hong Kong as early as the last week of June,
they said. BOC International Holdings Ltd., China International
Capital Corp., Bank of America Corp., BNP Paribas SA and UBS AG
are managing the sale, the people said.

Jian Qing’e, secretary of the board for Yitai Coal in Ordos
in Inner Mongolia, declined to comment.

Yitai Coal is gauging investor demand for its offer with a
tentative valuation of about 8.5 times estimated full-year
profit, the people said. The company trades at about 7.8 times
forecast 2012 earnings in Shanghai, according to data compiled
by Bloomberg. China Shenhua Energy Co. (1088), the country’s biggest
listed coal producer, trades at about 8.5 times estimated 2012
profit, the data show.

Inner Mongolia has the biggest coal reserves among Chinese
provinces, with about 700 billion tons at the end of 2008,
according to the regional government’s website.

To contact the reporter on this story:
Fox Hu in Hong Kong at
fhu7@bloomberg.net

To contact the editor responsible for this story:
Philip Lagerkranser at
lagerkranser@bloomberg.net

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