CK Life Sciences is likely to rise sharply on its debut on Hong Kong's secondary board tomorrow, boosted by the current vogue for bio-technology stocks and strong backing from billionaire tycoon Li Ka-shing, analysts said.
The importance of the company's connections with Hong Kong's largest property conglomerate Cheung Kong, chaired by Li -- whose name alone has been sufficient in the past to attract retail investor interest -- cannot be underestimated. These links will be all the more important given current difficult market conditions and the recent emergence of a patent dispute with GP Holdings over some of the company's products, which has compounded concerns about the outlook for CK Life Sciences' profitability.
Against such a background, the enthusiasm for shares in the fledgling biotechnology firm may prove to be very short-term, with the company still in its infancy and having little possibility of being profitable in the next few years, analysts said.
Alan Kei, vice president of Taiwan Securities, said CK Life Sciences will definitely move higher when it lists on the territory's second board, the Growth Enterprise Market, given the keen interest from retail investors.
Going forward, however, the stock is unlikely to see much outperformance in the medium-term, Kei said.
"I guess the share price for CK Life will be volatile ... it will be highly risky to invest in the stock," Kei said.
CK Life Sciences said the public portion of its initial public offering, or 10 percent of the shares on offer, was 121.08 times oversubscribed. The international tranche was 11 times oversubscribed but subsequently cut back to 50 percent of the shares on offer so as to satisfy retail demand.
The company offered 1.307 billion shares in total at an indicative price of HK$1.80-HK$2, with the final price set at HK$2 (US$0.26).
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