Satirical magazine publisher Most Kwai Chung makes Hong Kong IPO history with retail offer oversubscribed 6,000 times

Analysts say the demand is due to the popularity of its publications, but is speculative given the relatively small amount of money to be raised

PUBLISHED : Tuesday, 27 March, 2018, 4:39pm
UPDATED : Wednesday, 28 March, 2018, 9:26am

Most Kwai Chung, which runs popular Hong Kong satirical magazine 100Most and a digital media site tapping into local youth culture, has made history in the city with retail investors seeking more than 6,000 times the number of shares in its initial public offering.

The firm, which is set to debut on the Hong Kong exchange on Wednesday, had set the IPO price at the high end of an indicative price range of between HK$1 and HK$1.20. The total amount it will raise is just HK$81 million (US$10.3 million), but the huge subscription from retail investors has left previous hot IPOs in Hong Kong in the dust.

Previously, Magnum Entertainment, a nightclub operator in Hong Kong, had claimed the crown as the city’s most pursued IPO with an oversubscription of 3,559 times in 2014.

“Hong Kong people are familiar with Most Kwai Chung’s products, such as 100Most magazine and Most TV,” said Alex Wong, director of asset management at Hong Kong-based Ample Capital. “They are well-known brand names.”

Investor enthusiasm for IPOs in Hong Kong in general has been strong in recent weeks, Wong said, but still the huge subscription for Most Kwai Chung, in contrast to the relatively small amount to be raised, seemed “speculative”.

100Most – a satirical weekly that is a hit with Hong Kong’s Occupy generation

Most Kwai Chung said in an exchange filing on Tuesday that retail investors had submitted bids to buy 42.45 billion shares, 6,289 times the number of shares available in the public tranche.

Of the 67.5 million shares in total in the offer, 10 per cent is intended for the public, while the rest is for international placement and mainly targets institutional investors.

The international tranche was also oversubscribed by more than seven times, the filing said.

Related stocks have risen on expectations over Most Kwai Chung’s debut. One Media Group, which already holds a 10 per cent stake in Most Kwai Chung, has soared more than 20 per cent since March 16, when the IPO was launched. Media Chinese International, parent of One Media Group, has also more than doubled in the period.

Most Kwai Chung, which derives most of its revenue from advertising on its digital media platforms, reported a net profit of HK$36.3 million for the financial year ended March 31, 2017, up 62 per cent year on year. But in the eight months to November 2017, net profit decreased 84 per cent to HK$5.2 million from the same period a year earlier, due in part to spending on the IPO preparations, the company said.