Mainland restaurant chain Xiao Nan Guo Restaurants Holdings revived its initial public offering (IPO) yesterday, saying market sentiment had improved.
But the fast-growing company has cut its planned fund-raising size by one-fifth to boost its attractiveness.
The group, which operates Shanghai Xiao Nan Guo, Maison De L'Hui and the Dining Room, is among a handful of companies, including China Nonferrous Metal Mining and China Aluminum International Engineering, aiming to complete listing plans by the end of this month so they do not have to submit a new set of financial statements.
Xiao Nan Guo, which withdrew its IPO last September amid weak market conditions, lowered its offering price to a fixed rate at HK$1.50, allowing it to raise HK$512 million, about 20 per cent down on the amount targeted in the original IPO, based on the midpoint of its HK$1.65-HK$2.2 range for the IPO shelved last year.
Chief executive Kang Jie said he was confident that the IPO would be a success. 'A number of private equity funds already bought our shares prior to our IPO,' he said. 'If investors are willing to subscribe for our shares even in this economic situation, we know we have a very sound foundation.'
The group said net profit jumped 10.93 per cent year on year to 107 million yuan (HK$131.5 million) last year and was up more than half for the first quarter this year due to its rapid expansion. It opened 23 new restaurants last year, on top of 36 existing shops it had in 2010, bringing the total to 59. It planned to spend up to 85 per cent of its proceeds on opening 22 more shops this year and a further 58 by 2014.
Kang dismissed suggestions that the company could be expanding too fast, given slowing economic growth on the mainland, saying underlying demand was there.