Mainland sportswear retailer Xtep fell below its initial public offering price yesterday during its lackluster Hong Kong debut.

Xtep shares opened the day at HK$3.79, compared with their HK$4.05 offering price. After falling as much as 12 percent below the IPO earlier in the day, the stock closed at HK$3.80 - a 6 percent loss.

Market watchers weren't surprised at the performance.

"Compared with other mainland sportswear companies like Li Ning and ANTA, Xtep's market share is a lot smaller," said Dick Lee, corporate finance officer for Phillip Securities.

And given the market conditions, Lee said, stocks devoid of distinct selling points, such as Xtep, are likely to suffer.

Kenny Tang, associate director of Tung Tai Securities, agreed.

"The stock isn't very attractive, and the gross profits margin is actually narrowing," he said. "Brand recognition is also not as good as its competitors like Li Ning."

Xtep raised HK$3 billion from its IPO. It plans to use some of that money to strengthen its brand image.

The company currently owns three brands: Xtep, Disney Sports and Koling.

The Hong Kong share performances of Li Ning and ANTA yesterday also weren't good. Li Ning closed down 1 percent to HK$21.80, and Anta fell 2.44 percent to HK$8.

HSI dips

The Hang Seng Index (HSI) fell 1.83 percent, or 456 points, to close at 24,375.76 yesterday. Mainland telecommunication stocks, as well as resource-related firms, were among the biggest losers.

Sinopec fell 2 percent to HK$3.15, and PetroChina slipped 5 percent to close at HK$11 yesterday.

Mainland telecoms also skidded across the board in the wake of a major restructuring of the sector.

The H-share index, which tracks mainland companies listed in Hong Kong, fell almost 3 percent, closing at 13,622. Overall turnover on the Hong Kong mainboard was HK$83.6 billion.

Tang believes the HSI will find support at the 24,000 level.

(HK Edition 06/04/2008 page2)