Glamorous Prada IPO too rich for many

More than 300 fund managers and socialites squeezed into a glamorous roadshow for Prada's planned HK$20.31 billion initial public offering yesterday, but baulked at the valuation of the Italian fashion house.

A 25-minute fashion show overseen by group president Miuccia Prada, a pre-show cocktail complete with champagne and canap?s and a management presentation led by her husband and chief executive Patrizio Bertelli on the group's financial data and plans attracted local celebrities like Stanley Ho Hung-sun's fourth wife, Angela Leong On-kei, and Bank of East Asia's Adrian Li Man-kiu and his wife.

Some fund managers enjoyed the show of Prada's 2011 fall/winter collection, but said the price-earnings ratio was too high.

'It is the most glamorous fund manager presentation event I have been to,' the director of a European fund management house said. 'But the offering is richly priced.'

Another fund manager with a European brokerage said: 'The valuation is even more than LVMH. Unless you are buying [it] for its scarcity on the Hong Kong stock exchange, there are many choices.'

Prada is set to be the first Italian firm and the first luxury Western brand to list in Hong Kong, where it is due to make its debut on June 24. Based on its indicative offer price, ranging between HK$36.50 and HK$48 per share, and its forecast of Euro150.7 million (HK$1.7 billion) net profit in the six months to July 31 this year, the offer means a price of 27 times its PE ratio. It will offer 423.3 million shares.

The prospective PE marks a more than 20 per cent premium to its rival, Burberry, and is 18 times the PE of LVMH, the world's biggest luxury goods firm.