Another hot IPO coming to the Hong Kong stock market……..

The Hong Kong stock market corrected sharply after exceeding the lucky number 28800 yesterday.  After hitting another intra day high of 28871, the hang seng index closed sharply lower at 27479, losing almost 1400 points from day high to close about 700 points lower from the previous day.

However, the volatile market did not dampen strong interest for another IPO called China Dongxiang, which owns the Kappa brand for the China market.  The IPO price was set at the high end of the indicative range, at HK3.98 per piece, meaning that China Dongxiang is expected to raise about HK5.47billion!!

Dealers said that interest for China Dongxiang seems to be stronger than the recent IPO for Bosideng International which is a leading jacket designer since Bosideng brand image is not as strong as Kappa, which is ranked as China's third largest international sportswear brand behind Nike and Addidas.

So far, one of the most popular consumer related stocks to go IPO amongst retailer investors were Belle International, which attracted more than $55 billion worth of retail investor cash for its $1.1 billion offering.

The final IPO price for China Dongxiang value the company at approximately 24 times its FY2008 earnings, comparing to 30 times for Anta, 38 times for Belle and 42 times for Lining, based on various analyst estimates.

China's sports wear market is expected to enjoy compoun annual growth rate of about 23% from FY2006-FY2009 and China Dongxiang's profit is expected to doubleto RMB623m from RMB306m in FY2006.  The growth is expected to slow to about 20% in FY2008.  The IPO is handled by Deutsche Bank and Merrill Lynch, who helped to sell 1.375 billion shares of which 86% are new shares.  The balance 14% are sold by two units of Morgan Stanley which were pre-IPO investors in the company.  The offer accounted for about 25% of the enlarged share capital.  China Dongxiang is scheduled to start trading in the Hong Kong stock exchange on 10th October 2007.