Sihuan Pharmaceutical, a Chinese manufacturer of cardio-cerebral vascular drugs which delisted from Singapore Exchange (SGX) last year, started bookbuilding yesterday for a Hong Kong public offering.
The company, which is based in the southern China province of Hainan, aims to raise up to HK$5.75 billion ($740 million) to fund the expansion of its product portfolio and its sales and marketing network. If successful, it will be the second Chinese medical company in the past month to transfer listings from another stock exchange to Hong Kong. China Medical System, a pharmaceutical product marketing group, delisted from London’s Alternative Investment Market (AIM) in September and raised $129 million ahead of a Hong Kong listing in the same month.
Sihuan’s optimism about the Hong Kong equity market is supported by the fact that earlier IPOs by its domestic peers have been very popular. Sinopharm Group, China’s largest drug distributor, raised $1.13 billion from an IPO last year that attracted $114 billion of total demand and saw its retail offering more than 500 times subscribed. Its IPO price of HK$16 per share, which translated into 25 times forecast earnings, was seen as “overvalued” by many equity analysts, but that didn’t hinder the stock from jumping 16% in its trading debut on September 23, 2009. The stock closed at HK$31.50 yesterday, almost double its IPO price.
And, in September this year, MicroPort Scientific, a Chinese medical equipment maker, raised $198 million from a Hong Kong IPO, which was followed by the earlier mentioned listing of China Medical System. Both deals were priced at the top the indicated ranges. MicroPort has performed better in the secondary market so far, and yesterday closed 35% above the IPO price at HK$8.27. Shenzhen-based China Medical System's share price has fallen 0.7% from its IPO price to a close of HK$5.02 yesterday.
