Chinese loaders to arrive in January

Brisbane based King Equipment Ltd will start importing a range of earthmoving equipment from China next month.

It will start with four wheel loaders between 105 and 175kW and has sole distributor rights to later bring in backhoes, graders and vibrating rollers from two well-established Chinese manufacturers. Negotiations are underway too to import excavators. The sales territory includes New Zealand and Papua New Guinea.

Chairman and chief executive of King, Siegfried Konig – konig is king in German- said the company is making an initial public offer of shares to raise up to $2.5 million to help its expansion.

An unusual aspect of the float is that it is the first company to gain relief from the Australian Securities Investment Commission to apply simultaneously for listing on the Australian Stock Exchange and the Newcastle Sock Exchange.

King said the company developed the IPO to satisfy NSX listing. But having gained underwriting for the minimum subscription amount of $750,000 to list on the NSX, the company is now aiming for an ASX listing if it gains $2.2 million in subscriptions, and the 400 shareholders required to list on the ASX.

Shandong SEM Machinery Co Ltd established in 1958 and has 2200 staff including 500 engineers in factories covering 10km 2. It makes the wheel loaders and already exports them to 30 countries.

China Construction International Development Co Ltd (CCIDC) was established in 1905 and has been making graders since 1962. It has more than 70% of the Chinese grader market with models between 59 and 227kW and employs 1200 staff in a plant covering 11km 2.

Konig says both companies manufacture to the ISO9001 standard and have been capturing market share in other countries from the same competitors King faces in Australia.

In deciding to bring in the Chinese plant, Konig noted that sales of mining, resources and construction machinery in Australia in 2003 totalled about $2 billion, a 15% increase on the previous year when sales grew by 32%.

He said also that three of the SEM loaders were fitted with Cummins engines (the fourth has a Cat engine), ZF transmissions and US made hydraulic hoses. Manufacturing time is 45 to 60 days and shipping to Brisbane or Perth takes another 30.

King said two of the toughest markets for the loaders had been encountered in the Yemen and Abu Dhabi. As a result of that experience, the wheel loaders were fitted with bigger hydraulic oil coolers and new wiring harnesses.

The offer for 12.5 million shares at 20c each and underwritten by Findlay & Co, opened on November 15 and will run until December 13. It is expected that trading will start on December 22.

Further information: King Equipment, 07 3275 1880, 0411 111 193. Prospectus can be downloaded from www.kingequipment.com.au