Mainland sportswear retailer 361Ӽ International is following in the footsteps of its four biggest domestic rivals by seeking a market listing.
It hoped to raise at least US$200 million in a Hong Kong initial public offering to fund expansion, with the addition of 1,500 new outlets to take its total to more than 7,000 by the end of next year, sources said.
Of the four other firms to go public, three have listed in Hong Kong - Li Ning, Anta Sports Products and Xtep International Holdings - while China Hongxing Sports chose the Singapore stock market as its fund-raising platform.
The top five domestic firms accounted for a third of the mainland’s sportswear market share last year. Foreign players such as Nike and Adidas are the top two largest sportswear retailers on the mainland with a combined 33.7 per cent market share. 361”º, the country’s largest sportswear retailer, starts its pre-marketing on Monday and is expected to kick off the international roadshow the following week, with trading scheduled to start in the first week of next month.
Merrill Lynch and CCB International are assisting in the share sale. They would like to market the shares with a valuation of 11 to 14 times earnings for this year, according to two fund managers.
“I would place orders towards the low end as it has to sell shares with a significant discount among its listed peers,” said one fund manager.
Li Ning and Anta Sports are trading at 18 and 17 times expected earnings for this year.
Fujian-based 361Ӽ has been riding on high growth over the past three years, fuelled by an aggressive network expansion plan that has boosted the number of retail outlets from 432 in 2006 to 5,543 by March.
The company reported a 678 per cent rise in net profit to 179 million yuan (HK$203.04 million) last year from 23 million yuan in 2007, driven by higher sales volume due to the continual expansion of its retail network. Turnover rose 253 per cent to 1.3 billion yuan from 373 million yuan in 2007.
“Lower average selling price of its product lines and an extensively established nationwide network have helped it grab bigger sales volume within a short period and allowed it to be the fastest-growing sportswear business in 2008,” said a source.
Net profit is expected to increase substantially to 553 million yuan this year and 721 million yuan in 2010, according to a pre-listing report from Merrill Lynch.
It expected the company to continue enjoying strong growth prospects over the next two years to reach a gross margin and net profit margin of 38.2 per cent and 16.5 per cent in 2011, up from 32.7 per cent and 15 per cent this year.
Meanwhile, mainland speciality chemical maker Chemspec International is seeking as much as US$65 million from a share sale on the New York Stock Exchange, according to a term sheet sent to investors.
Chemspec is marketing its American depositary receipts at between US$7 and US$9 each. One receipt is equivalent to 60 ordinary shares in the company.
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Sportswear retailer targets US$200m in IPO
Wong Ka-chun and Tim LeeMaster
11 June 2009
Mainland sportswear retailer 361Ӽ International is following in the footsteps of its four biggest domestic rivals by seeking a market listing.
It hoped to raise at least US$200 million in a Hong Kong initial public offering to fund expansion, with the addition of 1,500 new outlets to take its total to more than 7,000 by the end of next year, sources said.
Of the four other firms to go public, three have listed in Hong Kong - Li Ning, Anta Sports Products and Xtep International Holdings - while China Hongxing Sports chose the Singapore stock market as its fund-raising platform.
The top five domestic firms accounted for a third of the mainland’s sportswear market share last year. Foreign players such as Nike and Adidas are the top two largest sportswear retailers on the mainland with a combined 33.7 per cent market share. 361”º, the country’s largest sportswear retailer, starts its pre-marketing on Monday and is expected to kick off the international roadshow the following week, with trading scheduled to start in the first week of next month.
Merrill Lynch and CCB International are assisting in the share sale. They would like to market the shares with a valuation of 11 to 14 times earnings for this year, according to two fund managers.
“I would place orders towards the low end as it has to sell shares with a significant discount among its listed peers,” said one fund manager.
Li Ning and Anta Sports are trading at 18 and 17 times expected earnings for this year.
Fujian-based 361Ӽ has been riding on high growth over the past three years, fuelled by an aggressive network expansion plan that has boosted the number of retail outlets from 432 in 2006 to 5,543 by March.
The company reported a 678 per cent rise in net profit to 179 million yuan (HK$203.04 million) last year from 23 million yuan in 2007, driven by higher sales volume due to the continual expansion of its retail network. Turnover rose 253 per cent to 1.3 billion yuan from 373 million yuan in 2007.
“Lower average selling price of its product lines and an extensively established nationwide network have helped it grab bigger sales volume within a short period and allowed it to be the fastest-growing sportswear business in 2008,” said a source.
Net profit is expected to increase substantially to 553 million yuan this year and 721 million yuan in 2010, according to a pre-listing report from Merrill Lynch.
It expected the company to continue enjoying strong growth prospects over the next two years to reach a gross margin and net profit margin of 38.2 per cent and 16.5 per cent in 2011, up from 32.7 per cent and 15 per cent this year.
Meanwhile, mainland speciality chemical maker Chemspec International is seeking as much as US$65 million from a share sale on the New York Stock Exchange, according to a term sheet sent to investors.
Chemspec is marketing its American depositary receipts at between US$7 and US$9 each. One receipt is equivalent to 60 ordinary shares in the company.
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