“All the IPOs are up, it doesn’t matter whether it’s a donkey or a dog”; China Grave Builder Leads Surge in IPO Stocks on Fed Support

December 21, 2013 Leave a comment

China Grave Builder Leads Surge in IPO Stocks on Fed Support

Fu Shou Yuan International Group Ltd., a Chinese developer of graveyards, soared on its Hong Kong trading debut as optimism the Federal Reserve will keep interest rates near record lows stoked demand for new equity.The Shanghai-based company jumped 53 percent from its offer price at the noon trading break, heading for the biggest first-day gain for a Hong Kong initial public offering of at least $100 million since July 2009, according to data compiled by Bloomberg. Kerry Logistics Network Ltd. (636), Consun Pharmaceutical Group Ltd. (1681) and China Conch Venture Holdings Ltd. also rose on their Hong Kong debuts today.

“All the IPOs are up, it doesn’t matter whether it’s a donkey or a dog,” said Louis Tse, a Hong Kong-based director at VC Brokerage Ltd. “The Fed tapering wasn’t that sizeable and it cleared uncertainties, and that’s being welcomed by the market.”

The 22 companies that completed IPOs worth at least $100 million in Hong Kong this quarter have gained on average 8.8 percent from their offer prices after adjusting for deal size, data compiled by Bloomberg show. Fu Shou Yuan, which develops and operates graveyards in Chinese cities including Shanghai, raised $215 million.

Asian stocks advanced today after the Fed showed confidence in the U.S. labor market by tapering asset purchases while still promising to hold interest rates close to zero.

BBMG Surge

Kerry Logistics jumped as much as 11 percent from its IPO price while China Conch rallied as much as 30 percent. Both companies sold shares at the top end of marketed price ranges, raising about a combined $750 million. Consun Pharma gained as much as 16 percent.

BBMG Corp. (2009), a Chinese cement maker that went public in July 2009, was the last Hong Kong IPO of at least $100 million to gain more than 50 percent in its first day, data compiled by Bloomberg show.

Fu Shou Yuan sold 500 million shares at HK$3.33 each, the top end of a marketed range. The company has an overallotment option to sell another 75 million shares, according to its IPO prospectus. Citigroup Inc. was the sponsor of Fu Shou Yuan’s IPO.

The company, founded in 2003, runs graveyards and funeral services in eight Chinese cities, according to its website.

To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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