Top Biz News

Jingkelong shares close up 22%

By Lillian Liu (China Daily)
Updated: 2006-09-26 13:59

HONG KONG: Shares in Beijing Jingkelong Co Ltd, the capital's second-largest supermarket operator, leapt 22 per cent to close at HK$5.5 (71 US cents) on their first day of trading in Hong Kong yesterday, boosted by investors' confidence in the mainland's booming retail sector.

Shares in the Beijing-based supermarket chain surged nearly 39 per cent soon after the market opened yesterday morning, reaching HK$6.25 (80 US cents).

Jingkelong had an IPO price of HK$4.50 (58 US cents), the top end of its indicative range.

With a more attractive valuation than its bigger rivals, Jingkelong's share sale in Hong Kong, which was oversubscribed 547 times in the retail portion and 60 times in the institutional section, has whetted investors' enthusiasm for China's retail sector.

The supermarket chain, which runs four hypermarkets, 34 supermarkets and 131 convenience stores, including self-managed and franchised outlets in the capital city, proposed an indicative price from HK$3.90 (50 US cents) to HK$4.50 (58 US cents) and offered 132 million H-shares, or 36 per cent of its enlarged share capital.

The top of its price range represents 19.7 times its 2006 earnings, whereas Jingkelong's rival Beijing supermarket operator Wumart Stores trades at 31 times its prospective profit.

Investor confidence has been boosted by the mainland's surging consumer-driven economy, with mainland retail already popular among institutional investors and the imminent "Golden Week" holiday likely to give a further fillip to retail shares, noted analysts.

Several offerings have demonstrated investors' interest in the sector, such as vintner Dynasty Fine Wines Group, sportswear retailer Li Ning and Mengniu Dairy, all of which have been heavily oversubscribed amid hopes that consumer spending on the mainland will continue to soar.