The company and its sole bookrunner DBS Vickers Securities also need more time to respond to questions from the stock exchange listing committee on a disclosure-related issue after the company's first response wasnÆt considered satisfactory, sources familiar with the matter say.
According to one source, the committee was unhappy about the omission of certain information the first time it considered the companyÆs listing application.
ôWhether it was deliberate or not, the omission of information can be a very serious issue,ö the source says.
Jingkelong, which operates hypermarkets, supermarkets and convenience stores in the Chinese capital, started pre-marketing of its IPO in early April after receiving a preliminary go-ahead from the listing committee - on the proviso it provided some additional information. At that time it planned to launch a formal roadshow on April 12 and targeted a trading debut on April 28.
After it became clear the formal approval would take longer to obtain, the roadshow was initially delayed until early May and now it has been postponed further until the company can get another listing hearing.
It still wants to list by mid-June in order to avoid having to update its financial accounts with fresher numbers (the current numbers run until the end of 2005), but wonÆt launch the roadshow until after BOCÆs trading debut, one banker says.
BOC, which is aiming for a June 1 listing, is expected to raise between $6 billion and $8 billion, which suggests it will absorb a lot of liquidity from the market. Given the huge size, it is also likely to deflect a lot of attention away from other IPOs in the market at the same time.
Jingkelong, which is seeking a listing on Hong KongÆs Growth Enterprise Market, is planning to raise around HK$700 million ($90 million) by selling 36% of the company.
It is expected to attract good interest from both retail and institutional investors who are hungry for Mainland-based consumption stocks and may also get some extra attention because of its wholesale and distribution business. The latter contributed half its revenues last year and makes it unique among its supermarket peers which are solely focused on the retail side of the business.
Barring a big shift in market sentiment or valuations over the next month, the supermarket operator is planning to come to market at a 2005 PE multiple in the mid-20s, which will pin it between its main Beijing competitor Wumart Stores and nationwide chain store operator Lianhua Supermarket.
Wumart currently trades at a 2005 price to earnings ratio of 44.9 times, but this falls to 30.9 times for 2006 amid expectations of strong earnings growth. The stock has been on a declining trend since it hit a record high of HK$30.45 on April 6, losing 17.7% of its market value in the process. Lianhua trades at 23 times last yearÆs earnings and 19.5 times its projected 2006 profit.
¬ Haymarket Media Limited. All rights reserved.
