Hunan Taizinai to raise US$200m from HK share sale
Hunan Taizinai Group, the mainland's largest maker of milk-based health drinks, plans to raise about US$200 million from an initial public offering in Hong Kong late next year, market sources said.
'There's not a huge impetus to get going straight away because no one is selling down a stake,' said a person familiar with the company. 'It's all new capital so there's no immediate need.'
Shareholders include Peking University Pioneer Technology, Hunan Trust, Hunan Business and Technology Investment Guaranty and Beijing Miyun Industrial Development Zone.
Morgan Stanley has been hired to arrange the deal.
Taizinai makes milk drinks with the bacteria Lactobacillus casei, which is found in the human intestinal tract and is essential for proper digestion.
Japan's Yakult Honsha, which makes similar products, trades in Tokyo at 73 times forecast earnings for next year. Its shares have risen 36 per cent this year, compared with a 3 per cent rise in the Nikkei-225 Index and the 0.7 per cent drop in the broader Topix Index.
China Mengniu Dairy, the mainland's biggest liquid milk producer, trades at 17 times next year's forecast earnings in Hong Kong. Its share price has doubled this year.
China Haisheng Juice Holdings, which manufactures fruit juice concentrate, trades at 10.5 times next year's forecast earnings in Hong Kong. Its shares are up 12 per cent this year.
'Consumer plays are one place where we are more positive on the overall China story,' said David Mackenzie, a director at Schroders Investment Management.
'We like the continued urbanisation and continued growth in wages which are going to support the consumer sector.'
Retail sales rose 13.5 per cent to 4.85 trillion yuan in the first eight months of this year, according to China's statistics bureau. They rose 13 per cent last year to 6.5 trillion yuan, the largest jump since 1997, according to the Ministry of Commerce. Retail sales should grow 11 per cent a year until the end of the decade, the ministry says.
Beijing has been trying to boost domestic consumption to reduce the country's dependence on fixed-asset investments and exports as the main engines of economic growth. The government increased the minimum wage and the salaries of civil servants. Beijing also scrapped an agricultural tax to boost the spending power of rural dwellers and raised the threshold on income taxes.
Urban per capita disposable income rose 9.6 per cent to 10,493 yuan last year, while in rural areas it rose 6.2 per cent to 3,255 yuan, according to the National Bureau of Statistics.
