China Ting threads together demand

Strong momentum propels IPO.

OEM silk manufacturer China Ting raised HK$1.01 billion ($130 million) from a 75 million share IPO on Friday (December 9). The BNP Paribas Peregrine led deal was priced at HK$2.025, just above the mid point of its HK$1.80 to HK$2.20 range.

Despite strong subscription levels, the company decided to play it safe with pricing in a nod to an IPO market, which is currently driven more by momentum than fundamentals. The institutional book closed 30 times covered and the retail book 98 times. By geography, 50% of demand came from Asia and 25% each from the US and Europe.

Based on its IPO price, the company's has been valued at 10.9 times 2005 earnings. OEM textile manufacturers such as Texwinca and Fountainset trade at 13.9 and 11 times 2005 earnings respectively.

Pricing was helped by the performance of knitwear manufacturer Shenzhou International, which has traded up 25%since its IPO in November.

Unlike its main comparables, China Ting also has a retail component, which contributes 10% of the company's overall revenue. The company operates four of its own brands, namely Finity, Elanie, DBNI, Riverstone. It also operates two brands under license in China, namely Burlington House and Max Studio. However, Burlington House does not comprise apparel but a range of home textiles, including pillow cases, bed sheets and bed spreads.

China Ting is owned and operated by a Hangzhou family (in China's Zhejiang province), which has been resident in Hong Kong for decades.

The company starts trading on December 15.

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