BEIJING, April 11 -- Dalian Port Co., which launched its US$277 million Hong Kong initial public offering (IPO) yesterday, plans to sell shares to long-term investors including Hutchison Whampoa Ltd., Singapore state-owned PSA International Pte Ltd. and China Shipping (Group) Co., a person familiar with the situation said.

    The company, which is based in the northeastern Chinese city of Dalian, plans to sell 840 million shares, or 30 percent of its enlarged share capital, in a price range of HK$2.175 (US$0.28) to HK$2.575 a share, the person said.

    The price range represents a price/earnings ratio between 12.6 and 14.9 times 2006 expected earnings, a more attractive valuation when compared with 19.4 times 2006 expected earnings for peer Xiamen International Port Co., which listed in December.

    The person said while the list of strategic investors hasn't been finalized, they should be limited to about three. The person said Hutchison, PSA and China Shipping are all planning to buy into the IPO but declined to specify the size of their intended stakes.

    Dalian Port is the largest port operator in northeaster China, operating the 11-berth Dalian Container Terminal, as well as the Dalian oil terminal.

    Some 90 percent of the shares for sale will be earmarked for institutional investors, with the remaining allotted to retail investors. Shares in Dalian Port are expected to begin trading April 28.

    Dalian Port has an overallotment option to expand the size of the deal by 15 percent if demand is strong, the person said, adding the company plans to issue dividends with a payout ratio of about 40 percent.

    In 2005, Dalian Port reported earnings before interest and taxes of 572.4 million yuan, up 22 percent from 470.4 million yuan the previous year, according to a research report from co-lead manager Nomura Holdings Inc.

    The company's oil terminals business accounted for 46 percent of the Dalian Port's earnings before interest and taxes, while the container terminal arm contributed 42 percent. The oil terminals business had a 55 percent market share in northeastern China last year in terms of crude oil throughput.

    Dalian Container last year recorded a throughput of 2.6 million 20-foot equivalent units, up 20 percent, the investment bank said. Enditem

    (Source: Shenzhen Daily/Agencies)