If the subscription rate is any indication, the share price of IT should soar when the fashion retailer makes its debut today, but it is not that simple.
As retail investors submitted 63,627 valid order forms for a combined 26.57 billion shares - 873 times the amount earmarked for them - the market came under pressure from two straight days of steep declines and only a modest rise yesterday.
All of a sudden, the more than 20 per cent first-day gains - perhaps even as much as 30 per cent - routinely projected for IT at the end of last week looked too optimistic, brokers said yesterday.
Some believe the stock will struggle to rise much above the $1.95 offer price while others expect some upside but argue that profit taking is likely to set in immediately after the price hits a level at which it will cover margin financing costs. That break-even point is estimated at $2.15, equal to a gain of just over 10 per cent.
Celestial Asia Securities research head Herbert Lau, expecting a 15 per cent to 20 per cent gain, doubted there would be much selling pressure from first-day punters.
IT raised $593.8 million by selling 304.5 million shares.
