Mainland sportswear retailer Xtep International Holdings received lukewarm responses on the first day of its retail subscription as the company appears to be less attractive compared to larger peers such as Li Ning and Anta Sports Products.

Despite Asia Cement's strong debut on Tuesday, investors were cautious, market watchers said.

Asia Cement jumped 38 percent after raising HK$238 million, becoming one of the strongest Hong Kong IPOs in 2008.

"As there are many similar stocks in the market already, Xtep is not exceptionally appealing to investors despite an attractive valuation," said Kingston Lin, an associate director at Prudential Brokerage. Prudential Brokerage said only HK$ 1 million in margin financing on the first subscription day.

Lin said Asia Cement was merely lucky enough to make a strong debut, which does not indicate a recovery of IPO sentiments. He believes subscription responses will stay similar for Xtep in the next few days.

Meanwhile, upcoming IPOs that do not have unique selling points are expected to have lukewarm response too, he added.

Dick Lee, a corporate finance officer at Philips Securities, said the overall market condition and sentiments have been improved, but it is not the case for IPOs. The brokerage has recorded HK$5 million in margin financing yesterday.

"The brand name of Xtep is not that well-known among Hong Kong investors compared to other sportswear brands," said Lee.

Lee, however, said subscription may pick up in the next few days as investors are more familiar with the company after reading the listing document and media coverage.

Xtep is raising as much as HK$3.03 billion by issuing 550 million new shares at an offering range between HK$4.05 and HK$5.5. It represents a price-to-earnings ratio range between 17.1 times and 23.3 times, compared to Li Ning's 49 times and Anta Sports Products' 33 times.

(HK Edition 05/22/2008 page2)