Dumpling chain tests appetite for HK IPO

Shanghai restaurant chain Xiao Nan Guo is hoping its second attempt at an initial public offering will tickle investors' palates as it seeks to raise as much as US$75 million, according to market sources.

Known for selling the Shanghai delicacy, xiao long bao, it had to shelve the listing last September when the blue-chip Hang Seng Index was hit by a wave of selling because of the euro-zone sovereign debt crisis and credit tightening on the mainland. The HSI bottomed last October at around 16,000, having lost 3,000 points over a few weeks.

Its original IPO plan aimed to sell 335 million new shares at an indicative price range of HK$1.65 to HK$2.20, representing a price-earnings ratio of 18.6 to 24.7 times its 2010 earnings per share. The pricing details of its revived IPO plan have yet to be released.

Traders said other smaller deals were about to push ahead with roadshows, having also delayed their IPOs since late last year because they saw little prospect of a strong rebound in stock markets soon.

Mainland furniture maker Merry Garden plans to raise US$20 million in the middle of July, according to a source close to the deal.

Chinalco Mining, a unit of the world's third-biggest aluminium producer, Aluminium Corporation of China, is set to start a roadshow for its US$200 million listing.

The listing of Chinalco and of Huadian Fuxin Energy, which has already secured enough cornerstone investors to support its US$391 million share sale, would be among the biggest deals in the Hong Kong IPO market so far this year.

Issuers worldwide have hugged the sidelines since London-based luxury jeweller Graff Diamonds shelved its US$1 billion Hong Kong listing plan last month after getting the cold shoulder from investors.

Graff was not the only international name to turn its back on a volatile market. Formula One also pulled a US$2 billion listing planned for Singapore the same week. And, premier English football team Manchester United said it was ditching plans for a US$1 billion Asian listing and would instead list in the United States.

Analysts said it was not known whether any or all of the shelved IPOs would be revived later this year because much hinged on the outcome of Greek elections this weekend, and on whether last weekend's Spanish bank bailout could restore investor confidence.

According to Dealogic, Hong Kong ranks eighth globally in terms of IPOs. It has topped the league table for the past three years.

The market turmoil has sidelined investors in Hong Kong, and main board turnover was just HK$38.25 billion yesterday. Total average daily turnover in the first five months this year has also fallen to HK$59.1 billion, down 21 per cent year-on-year.

So far this year, the top IPO markets are the Nasdaq, New York Stock Exchange and Shenzhen-Chinext.