(OCT 23): Shares of soft-drink maker China Resources Beverage Holdings Co jumped more than 14% early in their trading debut on Wednesday, adding to signs of an improving outlook for Hong Kong’s market.
The stock traded as high as HK$16.60 after an initial public offering that was priced at HK$14.50, the top of a marketed range. The gain came amid a broad rally, with the Hang Seng Index rising as much as 1.8%.
IPO activity in Hong Kong has been picking up as Chinese companies step up share sales to raise cash, taking advantage of the market rebound sparked by Beijing’s stimulus measures since late September.
A solid debut by China Resources Beverage may augur well for upcoming listings, including that of autonomous-driving technology firm Horizon Robotics Inc. Its shares will debut on Thursday after raising US$696 million in an IPO priced at the top of the range.
So far this year, listings in Hong Kong have seen an average first-day gain of 5.7%. New share sales have raised US$8.7 billion in 2024, beating all of last year’s proceeds. The tally has been helped by appliance maker Midea Group Co’s US$4.6 billion share sale last month, the market’s largest listing in over three years.
China Resources Beverage raised about HK$5 billion (US$649 million) in its IPO. The owner of the C’estbon bottled-water brand, valued now at a total of about HK$38 billion, will spend the proceeds on expanding production capacity as well as sales and marketing activities.
The funds may help the company in its battle with rivals amid slower Chinese consumption. Shares of peer Nongfu Spring Co are down 32% in 2024.
“CR Beverage’s oversubscribed Hong Kong IPO is likely to further heat up the price war among China’s bottled-water makers as it gives the C’estbon water owner a war chest,” Bloomberg Intelligence analyst Ada Li wrote in a note.
The Hong Kong portion of the offering was more than 230 times oversubscribed amid strong orders from retail investors, who were allocated 40% of the shares. The international offering, which made up 60% of the total, was oversubscribed more than 20 times. Cornerstone investors including a unit of China Tourism Group and UBS Asset Management AG took about 48% of the offering.
Hong Kong’s benchmark equity index is up more than 20% since a September low as optimism returned to the market after China’s central bank announced a series of measures late last month, including an interest-rate cut and liquidity support for stocks.
The listing by China Resources Beverage comes during the busiest week for Asia-Pacific trading debuts in more than two years, with around 20 deals poised to raise more than US$8 billion.
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