China High Speed Transmission Equipment Group is looking to raise up to US$272 million in an initial public offering in Hong Kong next month, according to the International Herald Tribune.
The company is the largest maker of wind turbine gears in China. It plans to sell 300 million new shares (a 25 percent stake) to finance expansion and research as the Chinese government invests in more renewable energy to combat energy shortages. In particular, wind power capacity is set to increase from 1,000 megawatts (MW) at the end of 2005 to 5,000 MW by 2010.
According to company officers, China High Speed has about 90 percent of the market for wind power transmission equipment in China.
The share price ranges from 5.38 - 7.08 Hong Kong dollars a piece. This range values the company at 16.5 - 21.7 times estimated 2008 earnings. By comparison, Vestas Wind Systems (the world's largest wind turbine maker) trades at 23.9 times next year's estimated earnings.
MarketWatch reports that China High Speed has also teamed up with General Electric in the development and manufacture of transmission equipment for GE's 1.5 MW turbines. GE Capital Equity Investments acquired a 5 percent stake in China High Speed in February.