Walker Group debut fails to dazzle

PUBLISHED : Friday, 08 June, 2007, 12:00am
UPDATED : Friday, 08 June, 2007, 12:00am

Shares of shoe retailer Walker Group rose by a less-than-expected 16.84 per cent on their trading debut yesterday, hurting investors who used margin financing to guarantee an allotment.

The stock climbed as much as 22.28 per cent above its offer price of HK$3.86 in early trading before sliding back to close at HK$4.51, with HK$555.85 million worth shares changing hands.

For each board lot of 1,000 shares allotted in the HK$579 million initial public offering, investors could have made as much as HK$860 if they sold out at the peak.

However, investors who used margin financing to secure lots lost HK$22, even at the peak price of HK$4.72.

Owing to the low allocation ratio, investors needed to subscribe to at least HK$772,000 worth of shares to secure one lot in the 592 times covered retail tranche, which locked up HK$34.2 billion.

'Weak market sentiment damped interest in the stock,' said a fund manager at a Japanese asset management firm.

Walker, which operates 393 sales outlets in Greater China, plans to spend HK$150 million to HK$200 million to open 190 self-managed sales points in Hong Kong and the mainland, and 150 sales points through franchising in the next two years, according to chairman Huang Wen-yi.

Meanwhile, the 74 times oversubscribed retail offering in the initial public offering of Tianneng Power International, the mainland's largest lead-acid battery maker, triggered a clawback mechanism, lifting the allotment for individual investors to 120 million shares from 30 million.

The battery maker raised HK$576 million after pricing the shares at HK$1.92 each, the top-end of its indicative price range.

The shares will begin trading on Monday.