Jewellery retailer Luk Fook Holdings (International) is expecting today's sale of 114 million new shares to generate a net $98 million, which will be used to pay off short-term loans and expand its retail network. For every five shares investors buy they will get one warrant, which will expire on May 31, 1999 and can be exercised at $1.20. The company, partly owned by beauty queens Pauline Yeung Po-ling and Yung Hung, will sell the new shares at $1 each, putting them on a fully diluted price earnings ratio of 6.9 times this year's estimated net profits. Co-founder and chairman Wong Wai-sheung said he was confident about the share sale, although jewellery stocks lost their shine recently when arch rival Fu Hui Jewellery Co posted a $124 million net loss for last year and Tse Sui Lun Jewellery (International) was troubled by a restricted cash flow and falling profits in 1995. 'Our profit growth in the past three years proved Luk Fook is different. This is also evidence we have survived the downturn in the retail market in the past two years,' Mr Wong said. Net profit for the past fiscal year to March is projected to jump at least 29 per cent to $60 million. In the previous year, net profit grew 11 per cent to $46.49 million, which Mr Wong said was eroded by the establishment of five stores. He said the new stores started making a profit by the end of last year. Normally, it would take about three years to recoup the investment, he said. Luk Fook, which operates 12 stores, plans to use $60 million of the proceeds to open three new outlets this year. An additional $20 million will be spent repaying $26.22 million in bank loans. About $13 million will be added to working capital while the remainder of the proceeds will be used to fund the purchase of a manufacturing facility.