Fosun underperforms in debut with disappointing 12pc increase
Shares of mainland conglomerate Fosun International, touted as one of the hottest offerings this year, gained a less-than-expected 12 per cent on their debut in Hong Kong yesterday.
Fosun surged as much as 21 per cent to an intra-high of HK$11.18 before sliding back to end at HK$10.34 compared with the offer price of HK$9.23. About HK$5.2 billion worth of shares changed hands.
The largest privately-owned conglomerate drew a strong response from local investors, with the retail offering 232 times covered and attracting HK$266.8 billion in orders.
Fosun's first-day performance was worse than expected, with the market expecting a gain of as much as 40 per cent. The shares traded 28 per cent above the offer price during the pre-opening session.
Before the offering, Fosun brought in 11 cornerstone investors including tycoons Li Ka-shing, Lee Shau-kee and Joseph Lau Luen-hung as well as First State Investment and Government of Singapore Investment Corp. Fosun, controlled by Guo Guangchang, is principally involved in retail, property, steel production, pharmaceuticals and financial investment.
After the first day of trading, Fosun is now valued at 47 times this year's earnings, far above its peer Citic Pacific's 23 times valuation. Fosun raised HK$11.5 billion on the local bourse, with the deal arranged by UBS, Morgan Stanley and China International Capital.
Meanwhile, Jiangsu-based supermarket chain operator Times Limited gained 14 per cent on its trading debut. The shares rose nearly 20 per cent to HK$5 in the early morning session before closing at HK$4.75, above its offer price of HK$4.18.
The firm raised HK$880 million after pricing the shares at the top-end of the indicative price range. HSBC was the arranger of the offering.