Milan Station shares soar 65pc as trade starts
Shares in Milan Station, which sells used luxury handbags, shot up 65 per cent yesterday, the best first-day performance this year after months of weak debuts from initial public offerings.
At one point the shares were up 77 per cent but closed at HK$2.77, 65.87 per cent over the offer price of HK$1.67.
'Given that there weren't enough shares in the first round, I believe those who bought them were speculators,' said Kenny Tang Sing-hing, general manager at AMTD Financial Planning. 'The first-day performance was really exceptional, given the overall equity market was down.'
Milan Station was founded by former waiter and street hawker Byron Yiu Kwan-tat 10 years ago. Yiu, who sold some of his stake through the offer, made a paper gain of HK$540 million. The chief executive and chairman still has a 75 per cent stake.
In April, mainland restaurant chain Tang Palace (China) Holdings also had a stellar debut, rising 40 per cent. But the overall performance of this year's offerings has been disappointing. More than a third fell on their debut.
Response from retail investors has been weak.
Interest in Hui Xian, the first yuan-denominated real estate investment trust available outside the mainland, was lukewarm among small investors. But it was just the opposite for Milan Station's listing, which saw overwhelming demand from local investors.
Individual investors in Hong Kong ordered 2,180 times the amount allocated to the retail portion of the offering - the largest oversubscription in a decade.
Milan Station sells secondhand bags made by Louis Vuitton, Hermes and Chanel, sometimes for more than the new bags at the designers' owns stores.
Socialites and celebrities sometimes skirt the long waiting lists to buy designer handbags at luxury retailers, then turn around and sell the bags to Milan Station for perhaps a 10 per cent mark-up. The company then adds 10 to 20 per cent to the latest 'must-have' bags.
Die-hard handbag fans boosted Milan Station's revenue last year to HK$730.3 million, up 19.5 per cent.
The company's 2010 net profit grew 38.5 per cent to HK$54.3 million from 2009.
Net proceeds of the offer will be HK$162.9 million, with a further HK$38.5 million raised if the over-allotment option, which enlarges the share capital, is exercised in full.
Most of the net proceeds will be spent on expanding the business on the mainland, where Milan Station hopes to set up 24 new outlets in the next two years in Beijing, Shanghai, Guangzhou, Chengdu, Hangzhou and other cities.