By contrast, Parkson Retail Group, a top mainland retailer, trades at an estimated ratio of 63.69 times, according to Bloomberg.

Maoye is among the first batch of companies to go public in Hong Kong this year.

'There is a trend for more funds to show interest in stocks that are less affected by the US stock market or the mainland's austerity measures, such as those related to domestic consumption,' said Ricky Tam Siu-hing, a director at Champlus Asset Management.

'But retail investors still have a wait-and-see attitude towards new offerings and they will only subscribe to offerings by leading players.'

Several mainland department store operators and retailers are planning to raise capital in Hong Kong.

Grand Ocean Department Stores is seeking to raise HK$2 billion selling new shares, while PCD Stores, which delayed its listing from last month, intends to raise up to HK$3.9 billion.

Maoye's offering will take place from January 18 to 23, while share trading is expected to begin on February 1.

Goldman Sachs is the sole bookrunner while BOC International and BNP Paribas are the joint lead managers.

Having opened the first Maoye Department Store in Shenzhen 11 years ago, the group now owns 15 stores with a total gross floor area of more than 478,141 square metres.

Among these outlets, six have a gross floor area of more than 40,000 square metres each, eight trade as Maoye and seven are under the Chengshang brand.

Maoye aims to open 11 more stores in the next three to five years, the company said in a statement filed with the Stock Exchange of Hong Kong.

Eight of the stores will be in its power base of Shenzhen, Chongqing and Sichuan province, and three will be in Changzhou, Jiangsu province and Shenyang, Liaoning province, cities considered to have high and rising consumption power.

The group will use 65 per cent to 75 per cent of the proceeds on opening stores and acquisitions, 15 per cent on renovations and the rest on information system upgrade, a source said.

'We plan to enhance and further distinguish our leading position in existing markets by adding eight new stores so as to capitalise on our established brand recognition, store network, resources, management team and consolidated market share,' a company statement said.

Net profit in the first nine months more than doubled to 297.88 million yuan from 146.23 million yuan a year earlier because of stronger sales and other gains. Sales expanded 19.67 per cent year on year to 1.19 billion yuan.

In 2006, net profit increased 58.7 per cent 217.06 million while total revenue jumped 47.3 per cent to 1.35 billion yuan.

Goldman Sachs forecast net profit would be 410 million yuan for last year and 698 million yuan this year.

However, Patrick Wong, an assistant analyst at Pinpoint Investment Advisor who attended Maoye's roadshow yesterday, said he was concerned about Maoye's ability to keep up the high growth rate.

'The same-store sales increased 19 per cent last year because of its Shenzhen flagship store expansion,' Mr Wong said.

'But I doubt if it can maintain the profit growth rate as no similar moves were mentioned.'

Another fund manager echoed Mr Wong's concern.

'Despite labelling itself as a successful consolidator in the industry, the profitability of stores under the acquired Chengshang brand still lags those under the Maoye brand,' the fund manager said.

In the nine months to September last year, the approximate total sales plus rental income per square metre for Maoye stores was 11,278 yuan on average, far more than 7,014 yuan for those under the Chengshang brand, then a Shanghai-listed Sichuan state-owned retail chain when Maoye acquired a 66.75 per cent stake back in 2005 for 380 million yuan.

Within two years, Maoye turned the loss-maker back to the black through store renovations, brand adjustments and by changing the bureaucratic mindset of employees.

But the acquisition, as well as significant capital expenditure to expand the sales network, resulted in a working capital deficit of 405.1 million yuan in the first nine months of last year.

'It's not hard to operate a department store but it's difficult to turn a loss-making store into a profitable one,' said the fund manager. 'Maoye said it would focus on acquisitions in the future but its consolidation ability remains to be seen.'

What the analysts say

Yiu Chin, director, Altruist Financial Group

Pros: The price-earnings ratio is relatively attractive

Cons: Maoye's retail network is not extensive enough and it has no presence in big cities such as Beijing and Shanghai

Patrick Wong, analyst, Pinpoint Investment Advisor

Pros: The assets it owns are attractive

Cons: The company has no specific plan to keep the same high growth rate in same-store sales reported last year

Ricky Tam Siu-hing, director, Champlus Asset Management

Pros: More funds are interested in domestic consumption-related stocks, which are less affected by the United States stock market and the central government's austerity measures

Cons: Competition among mainland department store operators is keen