15 September 2010

Hong Kong IPO market heats up

There are a number of stocks to watch over the coming months as the initial public offering (IPO) market in Hong Kong heats up with several companies waiting in the wings to tap Asian investors for cash. Among these hopefuls is Chinese fuel logistics company Winsway Coking Coal Holdings, which appointed two investment banks to handle its proposed market debut in the region earlier this year. It has now begun a pre-marketing campaign designed to test investor appetite in an October listing worth USD 1 billion.

The Beijing-headquartered group, an international business involved in the trading, distribution, processing, storage and transportation of petroleum, chemicals and coal, may not have a problem in finding ready cash, after all, it has already attracted USD 120 million in pre-IPO investments from Winstar Capital Group and Silver Grant International Industries, according to a term sheet cited by the press.

Winsway Coking is not the only company which has launched a roadshow this week to list in Hong Kong, one of the busiest IPO markets this year. Mainland-based SITC International, which claims to be China’s largest privately-owned container liner, is aiming to find up to USD 527 million from benevolent investors, paving the way towards a listing at the beginning of October. The company has started its bookbuilding process, indicating a desire to sell 650 million shares at an indicative price range of between HKD 4.78 (USD 0.62) and HKD 6.28 per unit.

Meanwhile, children’s clothing manufacturer Boshiwa International Holdings is waiting to see how its own USD 320 million-market debut in Hong Kong will be received. The retailer, one of the largest in its market in China, has joined the growing line-up of listing hopefuls, planning to open up its equity base to new shareholders by selling a quarter of its equity capital, or 500 million stocks.

According to FinanceAsia, Boshiwa’s offering received strong demand on the first day of its week-long roadshow – helped by the fact it has already secured prestigious cornerstone investors such as the Government of Singapore Investment. This interest is not immensely surprising as Boshiwa’s revenue and net profit have increased at a compound annual growth rate of 73 per cent and 170 per cent, respectively over the last three years.

Hong Kong shares advanced for a fourth straight session on 14th September as the blue chip Hang Seng index ended marginally up at 21,696 after trading between 21,656 and 21,763 (13th September: 21,658; 10th September: 21,257; 9th September: 21,167). Investor confidence was given a boost after Chinese data released over the weekend indicated there are some signs of economic improvement.

© Zephyr