Mainland packaging firm Jin Bao Bao seeks HK$65m in share offer

PUBLISHED : Tuesday, 08 November, 2011, 12:00am
UPDATED : Tuesday, 08 November, 2011, 12:00am

Mainland packaging and component manufacturer Jin Bao Bao Holdings seeks HK$65 million in a public offering today and a wave of more sizeable listing attempts may materialise in the coming two months if market sentiment improves.

Jin Bao Bao supplies packaging and structural parts to mainland television and refrigerator brands including Konka and Haier. It will offer 50 million shares ranging between HK$1 and HK$1.30 a share. Only 10 per cent of the shares will be opened for public subscription.

Chairman and chief executive Chao Pang-ieng said 87.5 per cent of the funds raised would be used to build a factory in Wuhu, Anhui. The factory, the company's fourth, would boost total annual capacity by about one-third to 20,100 tonnes.

However, executive director Zuo Jilin said the company had not yet found a strategic partner in the area. Typically, a packaging provider will locate its factory near a plant of a client because the appliances will have to be delivered to their facility for packaging.

Jin Bao Bao made 20.29 million yuan (HK$24.82 million) in net profit during the first half of this year - a rise of 64.8 per cent on the same period last year. But HK$8 million in listing expenses is likely to affect its profits.

It also said in its listing document that if it lost the tenancy of a factory in Sichuan, it might stand to lose 5.4 million yuan of annual income, on top of 2 million yuan in expenses to relocate the factory.

Financial controller Tsoi Ka-shing said it had not received any eviction notice from the landlord, and Jin Bao Bao only identified an alternative site as a contingency measure.

Several newly listed companies, including mainland restaurant chain Tang Gong and Citic Securities, have suffered heavy setbacks in their financial results shortly after listing. Tang Gong's net profit for the first half fell 55 per cent year on year and Citic Securities' net profit for the first three quarters plunged 74.19 per cent.

Eight new companies - including jewellery retailer Chow Tai Fook and Guodian Technology and Environment Group, will attend listing hearings in the coming weeks. They are expected to raise up to HK$73.32 billion in capital.