Timing and an ambitious expansion plan are the main reasons why Chow Tai Fook, the more than 80-year-old family jewellery business controlled by tycoon Cheng Yu-tung, is seeking to raise funds in the capital market.
Chow Tai Fook Group has hired Deutsche Bank, Goldman Sachs Group, HSBC Holdings and JPMorgan Chase for an initial public offering of its jewellery unit as early as the fourth quarter of this year, according to Bloomberg. The IPO was expected to raise US$3 billion to US$4 billion to support the jeweller's massive development plans, it said.
'It is an attractive IPO,' said Ben Kwong, chief operating officer of KGI Asia Ltd., a Hong Kong-based brokerage. 'Chow Tai Fook is a long-standing brand in Hong Kong and investors like China-related consumer stocks.'
'The timing for the company's listing is perfect,' said Kenny Tang Sing-hing, general manager of AMTD Financial Planning. He expects the company, China's largest jeweller, will float with a price earning ratio between 20 and 30, which was unlikely a few years ago.
'Investors might only consider a level between 10 to 12 for the price earning ratio for a retailing company some years ago. But retailing today is one of the industries that can raise money most easily thanks to strong consumption demand across border,' Tang said.
Albert Yip, of the Bocom International Group, expected Chow Tai Fook would be well received thanks to its strong brand image, large network and the robust demand for luxury goods on the mainland.
Chow Tai Fook declined to comment on its IPO plan yesterday.