Golden Eagle Retail Group, which started marketing its initial public offering in Hong Kong yesterday, has set its valuation close to those of its bigger rivals amid strong investor interest in mainland consumer stocks. According to fund managers, Golden Eagle plans to raise up to $1.41 billion by offering 450 million shares at an indicative price range of $2.50 to $3.15 each, translating into 20.8 to 26.21 times forecast earnings. Fund managers said the valuation of Golden Eagle was a bit expensive compared with Parkson Retail Group as it had only six stores, which were mainly located in Jiangsu province. Parkson, which operates 39 outlets in 26 mainland cities, is trading at 28.26 times forecast earnings. Its share price has doubled to yesterday's closing of $19.70 since its November listing last year. 'The high-end valuation is unattractive as the company is of a much smaller scale than Parkson,' a fund manager said. Fund managers are also concerned about the department store operator's negative cash-flow and liabilities problem, casting doubt on the company's future growth. Golden Eagle recorded negative cash flow and net current liabilities of 1.06 billion yuan in 2004. The company explained it continued to use short-term borrowings to finance its investments, including land acquisition, and applied internal resources to finance the offloading of business. In a pre-listing restructuring, Golden Eagle offloaded the group's wholesale business, including cars, chemicals and a department store in Shanghai, to a company wholly owned by chairman Roger Wang Hung for 749.8 million yuan. Market sources said that of the offer shares, 337.5 million would come from Mr Wang and he would use the funds raised to fund the offloading transaction. Golden Eagle forecast a net profit of at least 225 million yuan this year, representing 133 per cent year-on-year growth. The firm's net profits were 34.37 million yuan and 96.54 million yuan in 2003 and 2004, respectively. The float's institutional book opened yesterday and market sources said it was already fully covered. The retail offering is set to start on March 8 and the listing will be on March 21. ABN Amro Rothschild and Goldbond Securities are the joint bookrunners.