Listing candidates Xiwang Special Steel and bakery chain Christine International are pressing ahead with their initial public offerings next week, despite cautions from some brokers about a poor appetite for new listings among retail investors.
Shandong-based Xiwang, a sister company of sweetener maker Xiwang Sugar, plans to raise up to HK$1.68 billion by offering 500 million shares at anywhere between HK$2.65 and HK$3.36 a share. The proceeds are earmarked for funding a new production line and settling unpaid construction costs.
Christine, which is controlled by Taiwanese investors and is one of the mainland's largest bakery chains, with 898 shops mainly in the Yangtze River Delta region, aims to raise HK$550 million. The proceeds will largely be used to open 320 stores in the next two years, which may be done through acquisitions of rivals.
The pair are due to debut on the Hong Kong bourse next Thursday.
Francis Lun Sheung-nim, managing director at Lyncean Securities, said yesterday that retail investors' appetite for IPOs was poor because many of them got burned last year. Some 70 per cent of last year's IPOs sank below their offer prices on their debut or in the first week of the debut.
'Many retail investors have a weak appetite, even though the stock market has recently improved a bit,' Lun said. 'But Xiwang and Christine are relatively smaller IPOs in terms of proceeds, and their subscription should be covered primarily by institutional investors.'