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Sunday, 27 September 2009
Debut flops may not fully deter punters
Despite mediocre performances of some initial public offerings over the past week, analysts believe investors may still be tempted by share sales from Yingde Gases Group and China Vanadium Titano-Magnetite Mining.
Despite mediocre performances of some initial public offerings over the past week, analysts believe investors may still be tempted by share sales from Yingde Gases Group and China Vanadium Titano-Magnetite Mining.
Menswear brand China Lilang yesterday suffered the same fate as Metallurgical Corp of China (MCC), falling below its offer price on the first day of trading.
Lilang closed at HK$3.87, down 0.77 per cent from its offer price of HK$3.90, although it still fared better than MCC, the largest offering so far this year.
The mainland company raised HK$1.07 billion from its public offer, which was 158 times oversubscribed.
Lilang designs in-house a range of suits, jackets, shirts, trousers, sweaters and accessories, but manufactures only a portion of these in its factories in Jinjiang and Fujian. The rest are outsourced to contractors.
Analysts said underlying market appetite for new offerings persisted despite some weak performances, although investors might prefer more specialised companies.
“Individually, Yingde Gases and China Vanadium look more interesting because their areas of business are specialised,” said Conita Hung, an analyst at Delta Securities.
While Yingde Gases focuses on supplying industrial gases, China Vanadium engages in the production of iron concentrates and titanium concentrates.
After collecting a total of US$5.12 billion in Shanghai and Hong Kong, MCC saw its shares close yesterday at HK$5.68, still below their offer price of HK$6.35. It made its debut on Thursday.
Analysts queried the pricing of some recent listings. While MCC was priced at about 10 times earnings, they said such offerings should be valued at about 5 times earnings. They said some had even been priced more than 20 times earnings.
“I didn’t expect MCC to do well because its business is too diversified,” said Patrick Yiu Ho-yin, the managing director of CASH Asset Management. “Lilang has the potential to do well, given its strong focus on clothing manufacturing.”
Kenny Tang Sing-hing, an executive director at Redford Asset Management, said MCC was “a special case”.
China Resources Cement Holdings, a unit of China Resources (Holdings), has raised HK$6.39 billion, according to two people familiar with the sale.
The final pricing, at the top of a HK$3.20 to HK$3.90 range, values the company at HK$25 billion or 15.3 times next year’s earnings, banks involved in the sale said.
Shares of CR Cement are scheduled to be traded on the Hong Kong stock exchange from October 6.
Apart from Wynn Resorts, which is reportedly closing its offering on September 30, a day earlier because of oversubscription, Yingde Gases and China Vanadium are among analysts’ top picks.
The Hang Seng Index dropped 26.33 points yesterday to close at 21,024.4.
1 comment:
Debut flops may not fully deter punters
Amanda Lee
26 September 2009
Despite mediocre performances of some initial public offerings over the past week, analysts believe investors may still be tempted by share sales from Yingde Gases Group and China Vanadium Titano-Magnetite Mining.
Menswear brand China Lilang yesterday suffered the same fate as Metallurgical Corp of China (MCC), falling below its offer price on the first day of trading.
Lilang closed at HK$3.87, down 0.77 per cent from its offer price of HK$3.90, although it still fared better than MCC, the largest offering so far this year.
The mainland company raised HK$1.07 billion from its public offer, which was 158 times oversubscribed.
Lilang designs in-house a range of suits, jackets, shirts, trousers, sweaters and accessories, but manufactures only a portion of these in its factories in Jinjiang and Fujian. The rest are outsourced to contractors.
Analysts said underlying market appetite for new offerings persisted despite some weak performances, although investors might prefer more specialised companies.
“Individually, Yingde Gases and China Vanadium look more interesting because their areas of business are specialised,” said Conita Hung, an analyst at Delta Securities.
While Yingde Gases focuses on supplying industrial gases, China Vanadium engages in the production of iron concentrates and titanium concentrates.
After collecting a total of US$5.12 billion in Shanghai and Hong Kong, MCC saw its shares close yesterday at HK$5.68, still below their offer price of HK$6.35. It made its debut on Thursday.
Analysts queried the pricing of some recent listings. While MCC was priced at about 10 times earnings, they said such offerings should be valued at about 5 times earnings. They said some had even been priced more than 20 times earnings.
“I didn’t expect MCC to do well because its business is too diversified,” said Patrick Yiu Ho-yin, the managing director of CASH Asset Management. “Lilang has the potential to do well, given its strong focus on clothing manufacturing.”
Kenny Tang Sing-hing, an executive director at Redford Asset Management, said MCC was “a special case”.
China Resources Cement Holdings, a unit of China Resources (Holdings), has raised HK$6.39 billion, according to two people familiar with the sale.
The final pricing, at the top of a HK$3.20 to HK$3.90 range, values the company at HK$25 billion or 15.3 times next year’s earnings, banks involved in the sale said.
Shares of CR Cement are scheduled to be traded on the Hong Kong stock exchange from October 6.
Apart from Wynn Resorts, which is reportedly closing its offering on September 30, a day earlier because of oversubscription, Yingde Gases and China Vanadium are among analysts’ top picks.
The Hang Seng Index dropped 26.33 points yesterday to close at 21,024.4.
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