Shares of snack maker Want Want fall in HK debut
(Updates closing price and details)
By Kennix Chim
HONG KONG (Reuters) - Shares in Taiwan-based snack maker Want Want China Holdings Ltd (0151.HK) slid 2.7 percent in their Hong Kong debut on Wednesday, after the firm raised $1 billion in a Hong Kong initial public offering.
The company is the fourth to debut this year after several companies in the first quarter postponed or scrapped planned listings due to tumbling equity markets.
After briefly rising less than 1 percent, shares in Want Want then fell as much as 8.3 percent below their IPO price of HK$3 a share, which had been at the bottom of an indicated range.
The shares closed at HK$2.92, lagging the Hong Kong benchmark Hang Seng Index .HSI, which rose 0.68 percent.
The Hang Seng Index has dropped about 19 percent so far this year, after jumping 39 percent last year, amid global financial turmoil.
"The Hong Kong stock market is still volatile in the short term. Investors are not keen on buying IPOs," said Y.K. Chan, a strategist at Phillip Capital Management Ltd.
Chan said Want Want's valuation was only slightly cheaper than key rivals, but investors typically expect a larger discount for new-comers when stock markets are sluggish or weak. Market watchers had expected it to post a flat to slightly weaker debut after months of global financial market turmoil dented investor confidence.
Want Want sold 2.7 billion shares, or 20.5 percent of its enlarged share capital, in which 85.4 percent were existing shares. The deal was sponsored by UBS(UBSN.VX), Goldman Sachs (GS.N) and BNP (BNPP.PA).
Based on Want Want's closing price, the firm was valued at about 20 times forecast 2008 earnings.
By comparison, rival noodle and beverage maker Uni-President China (0220.HK) trades at 22 times while Tingyi (0322.HK) trades at 25 times forecast 2008 earnings.
Milk producer Mengniu Dairy (2319.HK) trades at 18.5 times, while Huiyuan Juice (1886.HK) trades at 17.7 times.
Due to the volatile market conditions, some companies have shelved their IPOs in Hong Kong, including Chinese property developer Evergrande Real Estate Group Ltd and Chinese packaging paper maker Wing Fat Printing, which raised about a combined $2.2 billion.
China Pacific Insurance (601601.SS) also delayed plans to raise roughly $4 billion in a Hong Kong share sale.
Seventy-one companies around the world have scrapped or delayed IPOs since the start of 2008, according to Thomson Financial data.
State-run China Railway Construction Corp (1186.HK) (601186.SS), which was the most popular IPO ever among Hong Kong retail investors, raised $5.4 billion in a dual Hong Kong and Shanghai listing, has risen only 3.7 percent since it listed on March 13.
Want Want's three key product categories -- rice crackers, beverages and snack foods -- each accounted for about one-third of estimated revenue in 2007.
The firm had a 68.6 percent market share in rice crackers in terms of sales in the first half of 2007, according to the ACNielsen report.
Want Want was listed in Singapore in 1988 and delisted in September 2007. Since then, the company has disposed of non-core businesses including hospitals, hotels and property to become a pure food and beverage company.
(US$1=HK$7.8)
(Reporting by Kennix Chim; editing by Kim Coghill)
