Apathy delays offer by China High Precision
Manufacturing company China High Precision Automation Group has delayed its proposed HK$750 million initial public offering amid a lack of investor appetite for new issues, sources said.
The company planned to sell 250 million new shares with an indicative price range of HK$1.80 to HK$3 per share. The international roadshow began on August 18 in Singapore and saw two days in Hong Kong, while subscriptions for institutional orders had been due to close on Tuesday, according to a sale document obtained by fund managers.
The retail offering was scheduled to start today and end on September 2, while trading is expected on September 10.
The deal's bookrunner, Daiwa Securities SMBC, called off the roadshow after meeting investors across Asia before launching the deal in Europe and the Middle East, one source said.
Sun Hung Kai International is the sponsor of the offering.
'Investors are still lukewarm to new offerings,' said a portfolio manager at a European asset management firm.
'The market is full of companies with good track records that only trade at about four to five times forward price-earnings. I can't persuade myself to pay for a new name that has no history.'
The offering represents about seven to 12 times the firm's earnings this year, the fund manager estimated.
The delay comes after 11 failed public offerings in the first seven months, or about 30 per cent of the listings in Hong Kong this year.
China High Precision produces indicators, controllers and pressure transmitters.
The company reported solid growth in operating and net earnings in the past two years because of strong sales and a higher profit margin.
Net profit at the firm grew 22.6 per cent to 184.6 million yuan last year from 150 million yuan in 2006, according to the preliminary prospectus.
The number of listings that have failed to reach the market this year: 11