SHARES of Florens Group, the China-owned container leasing company, lost more than 19 per cent of their value in debut trading yesterday. The counter closed at $2.325, down 55.5 cents from the issue price of $2.88, although the Hang Seng Index was up marginally. Weaker market sentiment and fear of interest rate rises prompted investors to dump excess shares they were saddled with after the company's initial public offering (IPO) of 85.12 million shares was 65 per cent subscribed. Florens, a subsidiary of shipping giant China Ocean Shipping, is the latest in a string of mainland companies whose IPOs has flopped in recent weeks. They include Harbin Power Equipment, whose shares lost 3.1 per cent in their debut trading last week. Despite connections with the China National Nonferrous Metals Industry Corp, Oriental Metals plunged almost 25 per cent when trading in its shares began last week. Brokers said Chinese companies had fallen out of favour with foreign investors amid concern that government-imposed loan restrictions were eating into company earnings and fuelling debt. But Florens managing director Luk Chiwing said investors should look at the medium and long-term prospects of the group. 'Fluctuations in share prices on a given day do not reflect the underlying potential of companies,' he said. Florens has a fleet of 260,000 TEUs (20-foot equivalent units), making it the sixth-largest container leasing firm in the world. Mr Luk said the substantial COSCO business had helped Florens maintain a 100 per cent utilisation rate for its containers, compared with a world average of about 85 per cent. But brokers said the fall was expected as market sentiment had been weakening since the share offer. They said investors who bought shares on margin were forced to cut their losses to avoid interest costs. However, Florens was able to place an additional 168.2 million shares with private and institutional investors. The group also sold US$20 million in fixed rate convertible bonds, according to sponsor and issue manager Sun Hung Kai International. Bonds worth US$2.5 million were snapped up by Hutchison Whampoa. Sun Hung Kai Convertibles was the largest buyer, taking US$7.5 million in bonds. SHK International managing director Peter Fung Yiu-fai said other bond buyers included overseas institutional investors. Analysts said investors were also concerned about Florens' heavy dependence on bank loans for its operations. Although Florens' debt-to-equity ratio of 1.7 times was considered normal in the container leasing business, it was high when compared with other listed companies. Mansion House analyst George Yiu Kai-yip said: 'Under cautious sentiment, people generally prefer to adopt a wait-and-see approach towards newly listed counters. 'For a company like Florens, further interest rate rises could eat up a large proportion of its earnings.' Doubts were also cast over the future arrangement between Florens and COSCO, which had paid a 10 per cent premium over market rates for leasing containers from Florens. Florens was expected to lower its charges for COSCO following its listing, which would dampen the company's earnings.