LISTING candidate Guangdong Fotao Group Corp is offering a bonus dividend as a sweetener which will effectively lower its price earnings (P/E) multiple.
The Chinese ceramics maker planned to declare a dividend yield of 3.5 per cent, or about five cents in cash, to holders of H shares as well as its mainland shareholders, an informed source said.
If a company lists near the end of the fiscal year, it usually does not pay a dividend.
Fotao, which is conducting an international roadshow, has a price range of $1.40 to $1.67, representing 8.38 to 9.78 times on a pro forma fully-diluted basis.
This was calculated on the profit projection of 178 million yuan (about HK$165.54) this year, up 77 per cent from last year's 100.14 million yuan.
On a weighted average basis, its P/E is 6.96 and 8.31 times. With the proposed bonus, the lowest end of the weighted average P/E will reduce to 6.72 times and pro forma fully-diluted P/E to 8.13 times.