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CHINESE seasonings producer Foshan Haitian Flavouring and Food Co. has kicked off its 1.86 billion yuan (US$308 million) initial public offering (IPO), the second largest since the country lifted a moratorium of IPOs late last year.
The Guangdong Province-based sauce producer is among the 52 companies that have been allowed to float by the China Securities Regulatory Commission following overhauls aimed at making China’s IPO system more market focused. The largest has been Shaanxi Coal Industry’s 9.8 billion yuan IPO.
China imposed a moratorium on IPOs in October 2012 as part of the government’s effort to boost confidence among investors who had suffered a sliding stock market for years. The freeze gave regulators time to overhaul a market where many new deals had been mispriced, with new stocks surging higher initially but then performing far worse than the broader market. The hiatus in the IPO market kept new stock from coming onto the market and potentially dragging prices down.
Still, China’s stock market did poorly even though no new supply reached the market and the benchmark Shanghai Composite Index lost 7 percent in 2013, putting it among the worst performers in Asia.
In a preliminary prospectus posted yesterday on the website of the Shanghai Stock Exchange, Foshan Haitian said that it will start selling up to 79 million shares, or 10 percent of its enlarged capital, to investors.
Foshan Haitian is scheduled to start testing investor interest from Jan. 15 before pricing the deal Jan. 22. It will take orders from investors between Jan. 23 and Jan. 24, according to the preliminary prospectus.
Foshan Haitian said its net profit for the first nine months of 2013 was 1.21 billion yuan yuan, up 37 percent from a year earlier. Its revenue for the same period was 6.29 billion yuan, up 18 percent from a year ago.
It expects its 2013 net profit to be between 1.58 billion yuan and 1.62 billion yuan, up between 30 percent and 35 percent from a year ago. Its net profit was 1.21 billion yuan in 2012. (SD-Agencies)
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