Auditors are slashing their forecasts for initial public offerings in Hong Kong this year as the euro-zone crisis continues to cast a pall over mega-size issuers.
PricewaterhouseCoopers (PwC) yesterday cut its 2012 IPO forecast by almost half to between HK$100 billion and HK$150 billion raised through 80 to 90 deals.
That is a far cry from its prediction in January of 100 IPOs this year, including 90 main board listings, fetching HK$200 billion to HK$230 billion.
PwC partner Edmond Chan said market conditions in the second half would continue to deter mega listings. Of the 25 main board listings in the first half, 14 were at single-digit price-to-earnings (P/E) ratios, according to PwC. Haitong Securities, the biggest Hong Kong listing and the third-largest global listing so far this year at HK$13 billion, fixed its offering price at HK$10.6, near the bottom of its target price range.
But Chan expected a better picture for listings in the second half, lifting the P/E ratio to 10 to 20 times for 2012 overall because the upcoming listings would mainly come from the retail and financial sectors. The listings in the first half were mainly from the industrial sector, the existing stocks of which were trading below 10 times P/E.
'The pricing of IPOs is affected by the share price of their peers which are already trading in the market,' Chan said. 'Investors are reluctant to pay a premium these days for new shares.'