Pacific Ports set for strong debut on red-chip ticket
Xiamen port operator Pacific Ports Co will make its Hong Kong debut on Friday, the same day the first vessel from Kaohsiung is scheduled to arrive in the port since the ban on direct links across the Taiwan Strait was lifted.
Brokers said the loss-making company, a unit of Fairyoung Holdings, would open strongly on the back of almost unguarded enthusiasm for China plays.
The shares were quoted in the grey market yesterday at between $4 and $4.20, compared with an offer price of $3.09.
Eugene Law, director of research at Lippo Securities, said: 'Obviously the listing coincides with the new developments very well.' The public portion of the offer was 141 times subscribed.
In response to the demand, the firm raised the number of shares available to the public to 60 million from 40 million by cutting the amount placed with institutional investors.
'People have jumped at it without really reading the prospectus,' Mr Law said. 'It's largely a concept [play].' Pacific Ports said it expected to raise a net $583 million from the issue before the exercise of the over-allotment option.
The funds will be used to expand and upgrade its port facilities and boost working capital.
Pacific Ports has yet to turn a profit, with losses before extraordinary items for last year estimated at not more than $17 million.
'The problem is that they have no positive earnings yet,' one analyst said. 'In 1997, they have promised a profit.' The company said in its listing prospectus that net profit this year before exceptionals would be at least $50 million.
The company also said it would benefit from direct links being restored.
Restoration would result in 'a significant increase in the level of sea freight in and out of Xiamen', it said.
