Mon, Jul 02, 2007 - Page 12 News List

Taiwan's Stella raises HK$3.02b

INITIAL PUBLIC OFFERING Two sources said the local company had sold 195 million shares at HK$15.50 per share. The price values the firm at US$1.5 billion

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Stella International Holdings Ltd (九興控股), a shoemaker that supplies to brands such as Givenchy, raised HK$3.02 billion (US$387 million) in a Hong Kong initial public offering (IPO), two people with direct information said.

The Taiwan-based company sold 195 million shares, a 25 percent stake, at HK$15.50, the top end of a HK$12.50 to HK$15.50 range, said the sources, who declined to be identified before an official statement. The price values the company at US$1.5 billion.

Investors may be less interested in Stella than in Belle International Holdings Ltd (百麗國際控股), China's largest shoe retailer that raised US$1.3 billion in a Hong Kong IPO last month, because Stella mainly supplies international high-fashion and casual brands, which include Celine, Donna Karan New York, Marc by Marc Jacobs, Clarks, Rockport, ECCO and Deckers.

"The market is not very interested in industrial stocks because they're facing the pressure of higher labor cost and lower profit margins," said Kenny Tang (鄧聲興), associate director at Hong Kong-based Tung Tai Securities Ltd (東泰證券). "The higher margins are earned by the brand-owners, not the manufacturers."

Thirteen Hong Kong IPOs of consumer-related companies ranging from restaurant operators and retailers to juice makers raised US$3.6 billion this year -- a quarter of total first-time share sale fundraising in the city -- capitalizing on investors' eagerness to benefit from China's consumption boom.

Stella will boost shares allocated to Hong Kong individuals to 30 percent of the offering, the sources said, suggesting orders were between 15 to 50 times the 19.5 million shares initially earmarked for them, compared with hundreds of times attracted to some Hong Kong IPOs. International institutions sought about 25 times the shares available to them.

Instead of fickle individual investors, Stella proabaly appealed to international institutions interested in steady long-term earnings and dividends, Tang said.

The final price values Stella at about 13.2 times its estimated earnings for next year, assuming the company sells 15 percent more stock under an option to meet excess demand and help stabilize the share price, the sources said.

Yue Yuen Industrial (Holdings) Ltd (裕元工業), another Hong Kong-listed shoemaker under Taiwan's Pou Chen Corp (寶成), trades at about 12 times estimated earnings.

The stock is scheduled to begin trading on Friday.

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