Cement and clinker manufacturer China Shanshui Cement Group plans to offer 650 million shares in its IPO, hoping to raise about HK$1.89 billion.

The company chairman, executive director and general, Zhang Caikui told reporters yesterday that 78 percent of the IPO proceeds would be set aside for the construction of the production outfit for its clinker and cement businesses.

With five new acquisitions in 2007, Zhang forecasted the production capacity of cement and clinker would grow by 6 million and 4.9 million tons this year, reaching respectively 34.8 million and 18.4 million tons.

Talking about the trend of product prices, the company`s chief financial officer Zhao Yongkui said the clinker and cement prices remained stable over the previous three years.

"Cement price slightly fell to 184 yuan per ton in 2007 from 187 yuan in 2006, while the clinker stayed flat," Zhao said, adding cement price would steadily pick up in the future.

Despite the fact the company`s current gearing ratio stands at a high level of 59 percent, Zhao said the ratio is normal in the light of the industrial standard, adding the ratio will further improve when the IPO is successfully listed.

The listing document projects that the company`s profits would double from 214 million yuan in 2007 to 445 million yuan this year. Zhang said the projection is calculated with the increased production capacity and product prices.

He also said that the company would raise the proportion of high quality cement to boost its profit margin.

In the face of the climbing coal price, Zhao said the company would mitigate the impact through effective cost control. The aggregated costs of raw materials, coal and electricity accounted for 83.7 percent of the total in 2007.

The company is the largest in Shandong, with market share between 30 to 70 percent across regions in the province, Zhao added.

He, however, said the company would focus its business on Shandong and Liaoning provinces and it has no intention to carry out any acquisition or expansion outside the provinces.

The company has priced its share of the IPO offer between HK$2.70 and HK$3.65 apiece. The deal will raise HK$1.89 billion as the offer price is set in the mid-point of the indicative range of HK$3.17.

The public offering starts today and is expected to end on June 25. Shares will be traded in Hong Kong bourse on July 4.