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SCMP Reporter

With investor sentiment improving,  fashion jewellery maker and marketer Artini China has joined the  queue of companies   approaching the local market for capital, aiming to raise as much as HK$960.4 million in an initial public offering on the main board.
The Shenzhen-based maker and retailer of  fashion jewellery and accessories is offering  280 million shares at a price range of HK$2.22 to HK$3.43 each. The company began its  road show on Tuesday and  public subscription for the share begins  today.  Trading of its shares is scheduled  to start on May 16.
'The market has been less volatile in the past  week so I wouldn't be surprised to see some companies emerging again to raise funds,' said a fund manager.
The  Hang Seng Index  has gained 74.57 points in the past four trading days,  despite a 158.8 point drop on Wednesday.
Lured by a seemingly reviving market, three other companies  have recently approached the market seeking up to HK$8.94 billion.
On April 24,  Maoye International Holdings, a mainland department store operator, raised about  HK$2.68 billion after pricing its shares at HK$3.10 each, the lower end of an  indicative range of between HK$2.90 and HK$3.80 each.
A day earlier,  women's wear retailer E-Land came to the market for HK$2.88 billion.
On Monday,  Asia Cement (China), the mainland unit of  Taiwan's second-largest cement maker, began  its road show seeking HK$2.42 billion.
Since Artini's  offering is the smallest among the four, it was expected to attract mainly retail investors, market observers  said.
'It is a small company and its ability to compete and to withstand risks is therefore not strong,' said Steven Yuan, an analyst at Chuang's Finance & Investments.
However,  Mr Yuan also said that because fashion jewellery and accessories were in an emerging sector on the mainland, Artini, as a market leader,  was in a position to generate more profit.
Managing 33 stores and 97 concessions on the mainland, Hong Kong and Macau, Artini is the second-largest retailer of fashion accessories in that market just behind Swarovski, the company claimed at an investment luncheon earlier.
Turnover rose 16.36 per cent to HK$339.48 million last year. Net profit climbed  39.25 per cent from 2006 to HK$73.49 million.
As its listing prospectus declares, 40 per cent of the funds raised from the  share offering will go to expanding  the mainland retail network in the next three years.
Another 20 per cent will be allocated to increase production capacity, while 15 per cent will be set aside for marketing and promoting the Artini and Q'ggle brands. The remainder will go to  enhancing the company's operational system and logistics centres and development of an advanced information technology management system.
Artini's operation, particularly on the mainland, 'will benefit from the booming retail market there', said Matthew Kwok, head of research at  Tanrich Financial. 'Its valuation is comparatively lower than other retailers such as Ports Design and Belle, which will also make it attractive to some investors.'
Artini's shares are priced at 12 to 18.5 times  forecast earnings for next year, compared with Ports Design's 20 times and Belle's 21 times.
As the world's largest consumer market, the  annual growth rate of consumer goods sales was 12.3 per cent from 2002 to 2006. Total retail sales of fashion accessories have risen from 10.1 billion yuan in 2002 to 35 billion last year.
Driven by stronger purchasing power, the annual output of the mainland's fashion accessories market has expanded to 50 billion yuan last year from 14 billion yuan in 2002.
Kingston Lin King-kam, an associate director of Prudential Brokerage,  was cautious about Artini's future performance. While conceding  it 'enjoyed certain brand awareness' among retail investors,  he said the market reception towards the new shares was just lukewarm.
'Unless a new stock can catch immense market attention and rises substantially on its trading debut, investor passion and interest towards new offerings are not likely to return in the short term,' he said.
Market volatility that began early this year has turned investors away from new listings,  mitigating investment risks and forcing as many as three listing candidates to scrap their share-sale plans in March.
What the analysts say
Steven Yuan, investment analyst, Chuang's Finance & Investments
Pros: As fashion jewellery and accessories  belong in a relatively new but booming market  on the mainland,  Artini China's  profitability will get a boost
Cons: The company is small and its ability to withstand market risks is  not strong
Matthew Kwok, head of research, Tanrich Financial
Pros:  Artini China's operations, particularly on the mainland, will benefit from the booming retail market there.  Its valuation is lower than other retailers  such as Ports Design and Belle, making its share offer attractive to some investors
Kingston Lin King-kam, associate director, Prudential Brokerage
Pros: The company has certain brand awareness among local investors
Cons: Market reception towards new offerings remains tepid and the appeal of new stocks  to investors will  stay low unless  a new stock's price  rises substantially  on its first trading day to rekindle investor passion



Accessories producer Artini gets  in listing line as volatility settles