The initial public offering (IPO) by New Media Group Holdings, the only ongoing share sale in town, received cold market response yesterday as investors shunned the volatile market.

That prompted some analysts to call for the company to put the deal on shelf.

The magazine publishing unit, owned by tycoon Yeung Sau-shing's Emperor Group - which planned to raise up to HK$112 million from the new share sale - received very few subscriptions for the share .

Analysts said the overall IPO market was bleak as almost all offerings have been called off in Hong Kong, and IPO activities will not pick up until the global economic outlook becomes clearer.

A report from CASH Financial Services released yesterday said it did not recommend the stock to investors, citing slow growth in traditional publishing industry.

"Traditional magazines and book selling businesses have very little room for further profit growth. New Media's counterparts in Hong Kong recorded losses in profit in recent years," the report said.

New Media publishes five Chinese-language magazines, namely Oriental Sunday, Weekend Weekly, New Monday, Economic Digest and Fashion and Beauty.

The company planned to sell 150 million new shares at a price range of HK$0.65 to HK$0.75 a piece, which represents on average 11.55 times to 14.44 times of its historical earnings, according to media analysts.

By comparison, home rival Hong Kong-listed Next Media has a price-to-earnings ratio of 15 times.

"The valuation of the company is not that attractive as peers like Next Media which enjoys better business exposure," a media analyst said.

"New Media's old-fashioned company management also plagues the company's development," said the CASH Financial Services' report.

"It is just a very bad time, nearly all listing candidates put their offerings on hold, companies from all sectors are clouded by the current global economic uncertainties," said Louis Wong, director at Phillip Securities.

Linus Yip, a strategist at First Shanghai Securities, said he did not recommend investing in any newly issued shares for the moment.

"The entire market sentiment is very pessimistic, newly listed stocks will inevitably be affected by the bad market atmosphere," said Yip.

The offering kicked off yesterday and will end on Friday. The shares are expected to start trading on February 12.

Yip warned that if the public offering attracted so little orders from investors, it might not qualify to list on the Hong Kong Stock Exchange. "It will absolutely hurt the company's image," Yip said.

(HK Edition 01/30/2008 page2)