Emperor Watch and Jewellry, a unit of tycoon Albert Yeung Sau-shing's conglomerate Emperor Group, plans to raise up to HK$581 million in a Hong Kong initial public offering (IPO).
The retail chain joins other companies rushing to launch their IPOs before the end of the first half.
Emperor Watch's offer will comprise 1.35 billion shares priced between HK$0.30 and HK$0.43, or 30 percent of the total capital after the IPO. Sources say each board lot contains 10,000 shares.
This is the sixth unit under Emperor Group to go public. The others include securities unit Emperor Capital Group, real estate and investment arm Emperor International, and the recently listed New Media Group Holdings.
Emperor Watch was formed in 1942. In addition to luxury-watch sales, it designs and sells jewelry in nine locations in Hong Kong and Macao.
From 2005 to 2007, the company's revenue increased from HK$645 million to HK$1.56 billion, its net profits rose from HK$26.1 million to HK$159 million, and its gross profit margin jumped from 14.4 percent to 22.4 percent.
Over 80 percent of the company's revenue in 2007 came from watch sales, and 12 percent came from jewelry sales in Hong Kong.
Emperor Capital and Dao Heng Securities are jointly arranging the deal. The Hong Kong public offering will begin June 30 and the shares are expected to start trading July 21.
"Subscription response to the company should be fine, as there will be some speculation in the smaller company," said Kingston Lin, an associate director at Prudential Brokerage, adding that investors are also very familiar with the company and with Yeung.
The market volatility this year has put a dent in investor confidence and taken a hefty toll on IPO interest.
Most new offers have fallen below their debut price, resulting in many companies delaying or cutting the size of their Hong Kong listings.
But a few companies craving capital have little choice but to list. That includes Chinese sportswear brand Xdlong International, TV advertising agency SinoMedia Holdings and gaming tycoon Stanley Ho's SJM Holdings.
Lin said that the plunging market on Friday didn't affect investor confidence in SJM, given that it's operated by a well-known public figure.
He also believes that the shares will increase above the offer price upon their debut, as many institutional investors are friends with the tycoon.
Prudential Brokerage recorded HK$21 million in margin financing for SJM within three days of its retail opening.
However, SinoMedia and Xdlong received lukewarm responses from retail investors. There is no margin borrowing recorded for the two stocks.
(HK Edition 06/28/2008 page2)