China Huiyuan Juice Group, the mainland's largest maker of pure juice that is seeking a Hong Kong listing, plans to pay out 25 per cent of its profit as dividend as it needs to reserve capital for expansion.
The planned dividend payout ratio is higher than the 21 per cent paid by Huiyuan's smaller rival China Haisheng Juice Holdings in 2005 but lower than Yantai North Andre Juice's 37.5 per cent.
Huiyuan, in which French food giant Danone has a strategic stake, plans to build factories in China's south-central and east-central regions, according to its preliminary prospectus.
Huiyuan, which aims to raise up to HK$2.4 billion in an initial public offering in Hong Kong, will set aside 35 per cent of the proceeds to build plants and another 35 per cent to expand and upgrade its sales and distribution networks. It will use the remainder for working capital and to repay debt.
The company expects last year's earnings to jump 82 per cent to at least 200 million yuan from 110 million yuan in 2005.
ACNielsen data shows Huiyuan had a 42 per cent share of the 100 per cent juice drinks market for the first nine months of last year.
Huiyuan was selling 400 million shares at an indicative range of HK$4.80 to HK$6 each, 37.5 to 45.6 times its estimated earnings per share last year, the prospectus said.
That is higher than the 14 times estimated price-earnings ratio of Haisheng, which jumped 12.24 per cent yesterday to HK$1.10, and the 18.5 times of Andre Juice, which gained 6.74 per cent to 95 HK cents.
Although Huiyuan's pricing is demanding, analysts said the company deserved a higher value than its rivals as it was the first juice maker that made its own branded products.
Haisheng and Andre Juice only focus on making apple juice concentrate and the majority of their products are for exports.
'Andre Juice and Haisheng can be viewed as food product manufacturers while Huiyuan is a China consumption play,' ICEA Securities analyst Carrie Chan said.