China Tourism Group Duty Free prices IPO at HK$158, raising US$2.1 billion in Hong Kong’s biggest deal this year
- China Tourism Group Duty Free has priced its IPO at HK$158 a share, raising US$2.1 billion of proceeds, according to a person familiar
- The price is a 28 per cent discount to its A share closing price in Shanghai on Thursday
China Tourism Group Duty Free has priced its Hong Kong initial public offering at HK$158 per share, raising about US$2.1 billion (HK$16.2 billion) of proceeds in the city’s biggest IPO this year, according to a person familiar with the transaction.
The final offer price works out at roughly a 28 per cent discount to its Shanghai-listed shares, which clossed at 188.62 yuan on Thursday. The stock has dropped 14 per cent this year amid a flare-up in Covid-19 cases on China’s southernmost island Hainan, where the company has bet on domestic tourism.
World’s largest duty-free retailer aims for Hong Kong’s biggest IPO of year
Shanghai’s tech board, known as the Star Market, was the world’s top IPO venue raising US$13.4 billion from 51 deals in the first six months this year, Refinitiv data shows. Hong Kong’s 22 IPOs, which raised just US$2.3 billion, is the lowest since the corresponding period in 2003.
China Tourism Group Duty Free’s shares are not fungible to its yuan-denominated stock due to China’s capital controls. It is often common for A shares issued by the same company to trade at a premium to the Hong Kong H share counterpart due in part to different investor perceptions of the company’s outlook across the two markets, analysts say.
However, the company’s challenges are not limited to a drop in cross-border passenger traffic and international flight arrivals due to China’s strict pandemic control policies.
China Tourism Group unit seeks US$2.5 billion in Hong Kong’s top IPO in 2022
Over half of China’s 2,810 asymptomatic Covid carriers reported on Thursday were in Hainan province. Meanwhile, China Tourism Group Duty Free said in its prospectus that its offshore stores dropped 7.7 per cent year-on-year in the first quarter due to temporary closures. The company has almost 100 per cent share of the offshore duty-free retail market in Hainan and runs what it claims to be the world’s largest travel-cum-retail complex in the city of Sanya.
“This will be a short-term impact,” Chang Zhujun, deputy general manager, said at a briefing last week. The company’s online business would counter the impact and it was making preparations to reopen its stores once curbs are removed, he added.
China Tourism Group Duty Free will use the IPO proceeds to expand new stores at airports, cross-border bus stations, seaports and railway stations. CICC and UBS are the joint sponsors of the deal.