HK Chaozhou Industries is expected to delay its listing to avoid any negative impact the Gitic Enterprises saga may have on investor sentiment towards future red chip listings. HK Chaozhou, an eel-farming and roasting company 67 per cent indirectly held by red chip Guangnan (Holdings), is seeking to raise between $100 million and $120 million through a public offer. The issue price will be set at a price earnings ratio of eight to 10 times net profit attributable to the company last year, estimated to be about $46 million. Sources close to the sponsors said there were originally two timetables drafted for HK Chaozhou's initial public offering (IPO), either before or after Easter. A later timetable would likely be adopted due to the negative publicity surrounding red-chip candidate Gitic Enterprises. Goldwyn Capital, which will co-sponsor the HK Chaozhou issue with CEF Capital, is also a sponsor for Gitic's IPO. About 10 investment banks will join the syndication of underwriters for the HK Chaozhou issue. Guangnan chairman Sun Guan said his firm was a Hong Kong listed company and any spin-off activity would be in accordance with local regulations. Guangnan's parent, Guangdong Enterprises (Holdings) (GDE), said its listing arm's future spin-off plans would not be affected by the news that the China Securities Regulation Commission (CSRC) challenged the listing of Gitic Enterprises. News spread through the Hong Kong market Gitic Enterprises had failed to obtain official approval from the CRSC before it offered shares to the public. Guangdong Enterprises director and general manager Deng Beisheng said all the listed arm's spin-off procedures went ahead according to Hong Kong's listing regulations. GDE is also the parent of Guangdong Investment, which spun off Guangdong Tannery on the Hong Kong stock exchange last year. Guangdong Investment's listing happened long before the establishment of the CSRC, at a time when mainland commercial arms in Hong Kong were under the supervision of the economic department of the Hong Kong branch of Xinhua (the New China News Agency). 'The CSRC has set up many regulations to manage and supervise mainland companies that want to go public,' Mr Deng said. 'But we, [Guangdong Investment and Guangnan] as Hong Kong listed companies, have to fulfil local regulations first.'