The global initial public offering of HKT Trust, the telecommunications business being spun off by PCCW, starts today, with expectations of strong demand despite the volatile market.
'We're not flying in the dark,' PCCW group managing director Alex Arena said about the timing of Hong Kong's first business trust offering. 'Not all IPOs are the same. A bad market for some IPOs can be a better market for others.'
Net proceeds from the offering are expected to be HK$9.64 billion, based on the mid-point of the HK$4.53 to HK$5.38 price range per unit of the business trust.
CICC, Deutsche Bank and Goldman Sachs are the joint sponsors, joint global co-ordinators, joint bookrunners and joint lead managers of the global offering.
Macquarie Securities analyst Lisa Soh last week said the HKT Trust stock valuation 'looks expensive' based on its estimated price-earnings ratio of 21.3 to 25.3 times. Its yield, or dividend, is projected to be from 7.4 per cent to 8.8 per cent.
'Compare that to SmarTone on a 7 per cent yield on 14 times earnings,' Soh said, adding that the largest asset on the business trust's balance sheet was goodwill.
Arena said other analysts had valued the business trust more highly. 'This is a growth business, a business that is highly competitive, has major market share in every sector. You can't find a telco like this overseas,' he said. 'Therefore we should be valued more highly on traditional metrics than our competitors.'