Lingbao Gold Raises Fund-Raising Target by 24%, Seeks $860 Million in its Hong Kong Listing

Strategic Insights -

Lingbao Gold, a Henan-based gold mining and smelting company, has increased its fund-raising target by 24% to $860 million, as gold prices continue to soar. The company plans to sell 258.5 million shares at an indicative price range of $2.55 to $3.33 each, with a valuation of 13 to 16.9 times this year's forecast earnings of $150 million. This valuation is more attractive than its rival, Fujian-based Zijin Mining Group, which is traded at 28.16 times forecast earnings.

Key Takeaways:

  • Lingbao Gold has raised its fund-raising target by 24% to $860 million, the largest amount among the year's first listing candidates.
  • The company plans to sell 258.5 million shares at an indicative price range of $2.55 to $3.33 each, which would give it a market capitalization of approximately $5.5 billion.
  • Lingbao Gold has a more attractive valuation than its rival, Fujian-based Zijin Mining Group, with a price-to-earnings ratio of 28.16 times forecast earnings.
  • The company's annual average selling prices of gold have maintained a rising trend in the past three financial years, with a selling price of 114.3 yuan per gram in the first six months.
  • Lingbao Gold operates four gold mines in Henan, Xinjiang and Jiangxi, with two gold mines under construction and 18 exploration projects.
  • As of June 30, the company had 44.9 tonnes of gold reserves, which would provide a significant revenue stream for the company.
  • The company plans to use half of the proceeds on existing projects, while up to $101 million will be for acquisitions of additional mines and mining rights in the Xiaoqinling region.
  • The retail tranche of Lingbao Gold's float will kick off next Friday and trading is due to start on January 12.

Statistics:

  • Lingbao Gold's fund-raising target: $860 million (up 24% from the previous target)
  • Number of shares to be sold: 258.5 million
  • Price range: $2.55 to $3.33 each
  • Market capitalization: approximately $5.5 billion
  • Valuation multiple: 13 to 16.9 times forecast earnings
  • Price-to-earnings ratio of rival Zijin Mining Group: 28.16 times forecast earnings
  • Average gold selling price (three years): 81.7, 96.5, and 109 yuan per gram
  • Average gold selling price (first six months): 114.3 yuan per gram
  • Total gold reserves: 44.9 tonnes
  • Capital expenditure for next year: 275 million yuan (up 178% from this year)
  • Dividend payout ratio: 40%

Sources:

  • Market sources
  • Lingbao Gold's preliminary offering document
  • BOC International and Celestial Capital (joint sponsors of the offering)