Tongjitang expansion plan

Tongjitang Chinese Medicines, a Shanghai-based drugmaker, plans to raise up to $158 million on the New York Stock Exchange this month as it expects to expand in the mainland, according to sources.

Tongjitang was marketing 9.87 million American depositary shares of which 85 per cent were new while the rest were offered by company executives and private equity firms, the sources said. The offer represents 29.5 per cent of the firm's enlarged share capital.

"The company's profit margins are very good and they don't have many competitors. Then there's the fact that there isn't much risk when you look at listed Chinese pharmaceutical companies," a fund manager said.

Talks ended

Angola's State oil company said it has ended talks with China Petroleum Chemical Corp to invest in a $3.7 billion oil refinery, threatening Chinese plans to boost energy cooperation in Africa, Bloomberg News reported last week.

Sonangol, based in the Angolan capital Luanda, is seeking to cut the cost of the 200,000 barrel-a-day plant and may start construction in the second half of this year, Vice President Anabela Fonseca said at an oil refiners' conference in Cape Town, South Africa. The Sonaref project in Lobito municipality "is under way".

China plans to increase investment in Africa to tap oil and natural gas resources. China's government offered a $2 billion loan to Angola through Eximbank, State-owned Angola Press Agency reported last June. That's in addition to $2.4 billion of credit provided in March 2006.

Fund raising

Citigroup Property Investors, the real estate unit under the global financial services company, said it plans to raise as much as $1.29 billion for a fund which will invest in property and related assets throughout the Asia Pacific with a primary focus on China and India.

Citigroup and investors will pump $200 million into the fund CPI Capital Partners Asia Pacific, LP, the company said in a statement last week. To date, approximately 40 percent of the fund's capital has been secured, and David Schaefer, head of CPI Asia Pacific, will lead a team of more than 25 professionals to manage the fund, the company said.

Ship production

China Shipping Development Co Ltd said last Monday it plans to build six oil tankers worth $307.56 million for delivery in 2009 and 2010 to help expand its ocean shipping business.

China Ship has signed an agreement with China's Dalian Shipbuilding Industry Co Ltd to build six tankers with a capacity of 76,000 tons, China Ship said in a filing to the Shanghai Stock Exchange. The deal needs the approval of shareholders, it said.

China Ship would pay in five installments, with 20 percent of the cost coming from its own capital and 80 percent from bank loans, it said.

Printing partnership

Dutch printing giant Oce further entered the Chinese market as it signed partnership pacts with Chinese company Founder to boost its operations in China last week.

Oce announced that it entered into a strategic distribution partnership with Founder Group in China and has begun to use Founder's software. According to the pact, Founder's nationwide sales organization will sell Oce's digital printing systems in the high volume printing and graphic arts markets.

Production printing in China is still 98 percent offset and 2 percent digital printing. Oce forecasts a digital production printing growth rate of a 17.5 to 20 percent a year on year until 2015 in China.

Steel merger

Benxi Iron Steel Group's chairman said the company will combine this year with China's third-largest producer of the alloy, Anshan Iron Steel Group, in a move that could boost production five-fold.

The combined steel maker will boost production to 36 million metric tons by 2009, Benxi Steel's chairman Yu Tianchen said in Beijing. Liaoning Province-based Benxi produced 7.3 million tons of steel last year. The combined steel producer, called Anben Steel Group, can produce 22.6 million tons of alloy a year, based on 2006's total output by Anshan and Benxi Steel.

Capacity raise

JFE Steel Corp and Guangzhou Iron and Steel Enterprise Holdings Ltd will raise production capacity for galvanized steel sheet and build a cold-rolled steel plant at their joint venture project in China.

The companies will build a second galvanized steel sheet plant with annual output capacity of 400,000 metric tons and a cold-rolled steel plant with annual capacity of 1.8 million tons, JFE Holdings Inc said in a statement to the Tokyo Stock Exchange last week.

The project will cost $500 million, with construction beginning this year and due for completion in 2010.

Nuclear reactors

China will award a contract to build two nuclear reactors in its south to France's Areva SA, a Chinese official said last week.

The two sides are working on a final accord to build the reactors at Yangjiang in South China's Guangdong Province, Qian Jihui, a senior adviser at China National Nuclear Corp, the nation's top nuclear reactor builder, said in Beijing. The contract was originally awarded to Toshiba Corp's Westinghouse Electric Co, which will get an agreement for two other reactors in East China's Shandong Province.

China needs to add two reactors a year to meet a 2020 target of producing 4 percent of its power from nuclear energy, up from about 2.3 percent now. Areva and Westinghouse are competing to build as many as 26 more reactors by 2020 as China turns to atomic energy to cut pollution and reliance on oil.

(China Daily 03/12/2007 page2)