June 20, 2007 / 10:05 AM / 13 years ago

UPDATE 2- China shoemaker Anta eyes $406 mln HK IPO

(For an expanded IPO diary, please click <HK/IPOMENU>) (Adds broker comments, comparison with peers, details)

By Kennix Chim

HONG KONG, June 20 (Reuters) - Anta Sports Products Ltd., a Chinese sports footwear manufacturer, plans to raise as much as US$406 million in a Hong Kong initial public offering, according to a term sheet obtained by Reuters on Wednesday.

Investors have been crowding into stocks offering exposure to surging consumer spending power in China, where retail sales rose 15.9 percent in May from a year earlier to a three-year high.

Anta, which kicked off a marketing roadshow on Wednesday, is offering 600 million shares, representing 25 percent of its enlarged share capital, at HK$4.28 to HK$5.28 each.

The price range values Anta at 26-32 times forecast 2007 earnings and 16 to about 20 times forecast 2008 earnings.

Top Chinese women’s shoe seller Belle International Holdings 1880.HK, which listed a US$1.1 billion IPO last month, and mainland shoemaker Prime Success (0210.HK) currently trade at about 44 and 26 times prospective earnings, respectively.

Separately, Taiwan-based shoemaker Stella International, which manufactures for brands such as LVMH (LVMH.PA) and Paul Smith, plans to raise as much as US$388 million in an IPO by selling shares at HK$12.50 to HK$15.50 apiece, valuing the firm at 12-15 times forecast 2007 earnings.

Anta will begin is public offering on Tuesday, with the price to be fixed on June 29 and a trading debut scheduled on July 10, under the symbol “2020” (2020.HK).

Les Alexander, owner of the Houston Rockets National Basketball Association team in the United States, will invest HK$234.5 million (US$30 million) for a stake in Anta, with the shares subject to a one-year lock-up, according to the company’s preliminary prospectus.

The Rockets have a link to China through their All-Star centre Yao Ming, arguably China’s biggest sports star.

IPO FEVER?

Investors have been bidding up IPOs as the local stock market hits new peaks. But with at least 15 more deals in the immediate pipeline, investors will favour consumption stocks, said Y.K. Chan, strategist at Phillip Capital Management (HK) Ltd.

The Hang Seng Index .HSI ended up 0.47 percent at a record 21,684.67 on Wednesday.

Anta produces and sells it own-branded shoes and footwear and apparel products for other brands through wholesale channels. It does not sell its own-brand products directly to consumers, but relies on distributors to manage local networks of its authorised retail outlets.

The company estimates its 2007 net profit would rise to at least 384.4 million yuan from 147.4 million yuan in 2006.

It plans to distribute 25 percent of its profit as an annual dividend in 2008.

The company will use the IPO proceeds for marketing campaigns, expanding the coverage of its sales network and acquiring land use rights.

Morgan Stanley (MS.N) is sponsoring the deal. (US$1=HK$7.8) (Additional reporting by Donny Kwok)

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