PCD Stores Group Ltd. closed up 31% on its first trading day on the Hong Kong stock exchange Tuesday, as investors banked on robust growth in China's domestic consumption and the company's experience in the retail industry.
Xiamen-based PCD, majority owned by businessmen Alfred Chan and Edward Tan, closed at HK$2.55 (33 U.S. cents) Tuesday, above its initial public offering price of HK$1.95 and outperforming the benchmark Hang Seng Index, which finished 1.23% lower.
PCD raised US$377.4 million after pricing the sale of 1.5 billion shares near the top end of a HK$1.65-HK$2.00 indicative price range. The IPO price translated to 18.8 times forecast 2010 earnings, lower than those of peers such as Intime Department Store Group Co., which is trading at a forward P/E of 25.4 times, and Maoye International Holdings Ltd., at 20 times, according to Thomson Reuters.
KGI Securities said PCD should benefit in the long run from Beijing's efforts to increase domestic consumption.
Retail sales in China have risen at a compound average growth rate of 12.5% over the past 10 years and will grow as the urban population increases.
PCD, established in 1998 with a single store in the eastern Chinese city of Xiamen, Fujian province, operates or manages 16 department stores and one outlet mall in various cities.
Private-equity firm 3i Group PLC, which first invested in PCD in October 2005, sold its entire 9.5% stake in the IPO. 3i Group paid HK$0.84 a share for its stake.
Credit Suisse Group was the sole bookrunner for the IPO.