Ruinian shares decline 7.4pc in trading debut
Shares of Ruinian International, a mainland health-care product manufacturer, fell 7.4 per cent on their first day of trading yesterday, steeper than the 2.6 per cent drop in the Hang Seng Index.
The company's shares opened at HK$2.99 - slightly below its offer price of HK$3 - before touching HK$3 in the morning session to close the day at HK$2.77.
'I'm not surprised at the fall in Ruinian's shares as the Hang Seng Index dropped,' said Francis Lun Sheung-nim, a general manager at Fulbright Securities.
Concern over further tightening in monetary policy after the Federal Reserve in the United States raised its discount rate sent the Hang Seng Index back below 20,000 points yesterday.
The index dropped 528.13 points to close at 19,894.02.
Most of the recent new listings - such as the world's largest aluminium producer Rusal of Russia and mainland coal producer SouthGobi Energy Resources - have fallen on their debuts with subsequent further drops.
'Ruinian and other new listings are unlikely to rebound substantially in the short term due to the poor market sentiment,' Lun said.
He believes the fact that the public offering of Ruinian was more than 6.36 times oversubscribed was because it attracted Li Ka-shing as a shareholder.
'It is a blind emotion. Everyone can lose money in the stock market, even Li Ka-shing,' Lun said.
Ruinian International chairman Wang Fucai remained upbeat yesterday.
'The spending on amino acid-based nutritional supplements on the mainland is 1.40 yuan per capita, compared with 2.80 yuan per capita in Japan,' he said. 'It shows there is ample space for development in the mainland market.'
The company plans to launch two or three products this year and will continue to expand its sales network.
Ruinian holds a 21.6 per cent market share of the country's health supplements market.
For the first nine months of last year, the company booked turnover of 523.67 million yuan, down from 586.73 million yuan the previous year. Net profit rose 11.61 per cent to 132.37 million yuan from 118.6 million yuan a year earlier.
The Jiangsu-based company hopes to use the listing proceeds for market expansion, building new production lines and potential acquisitions, as well as for product research and development.