Shares of department store operator Maoye International Holdings received a lukewarm response yesterday on the first day of their retail subscription.

The timid interest from investors came despite Maoye shrinking its initial public offering (IPO) size and lowering the share price from where they were at before the IPO was put on hold earlier this year.

Phillips Securities said 1.3 million in margin financing was recorded on the first public offering day.

"The response is in line with our expectations," said Dick Lee, a corporate finance officer with the brokerage. "We didn't expect a very warm response."

He attributed the lukewarm response to the weak IPO market, saying: "Besides China Railway Construction, the trading debuts of newly-listed companies haven't been that good".

Lee also noted that the stock-market fluctuation deterred investors from subscribing. "The stock market may be good when you place the IPO order, but it can turn around the next day."

Maoye shelved its public offer in January on poor market sentiment. The department store operator ended up cutting the offer size by 54 percent. It is now issuing 863 million shares at between HK$2.90 and HK$3.80 per share, seeking to raise HK3.28 billion.

In January, the firm had planned to raise as much as HK$7.06 billion by issuing 1.25 billion shares at a cost of between HK$4.35 and HK$5.65 each.

Based on the lastest price range, the company's price-to-earnings ratio forecast for 2008 is about 19.5 to 25.5 times.

Kingston Lin, an associate director at Prudential Brokerage, said his firm has leant HK$100 million in the form of margin finance.

"It is better than our expectations," Lin said.

But it was the mainland investors who placed big orders, he added.

"Almost no local investors inquired," he said. "Even though each share is priced at the low end, the price is only reasonable, not attractive."

But Lin expects the shares will perform well in their trading debut, as "most shares are in the hands of institutional investors", he said.

One lot of Maoye is 1,000 shares and costs about HK$3,838.

The retail investor subscription period will end on Thursday, and the stock will begin trading on May 5.

(HK Edition 04/22/2008 page2)