Shares of Wilmar International fell as much as 2 per cent yesterday when the palm oil giant confirmed it was calling off plans to list its China operations in Hong Kong.
The stock fell to an intra-day low of $6.46 before closing at $6.51, down 8 cents or 1.2 per cent for the day. Wilmar said its China subsidiary’s listing application to the Hong Kong Stock Exchange had lapsed and that it had ‘no current intention to submit a fresh listing application’.
In May, Wilmar chairman and chief executive Kuok Khoon Hong revealed Wilmar’s Hong Kong listing plans and said a new listed firm could be worth as much as US$15 billion, based on a price-earnings ratio of 25 times and profits of about US$600 million.
Analysts said then that a listing could raise as much as US$3-4 billion as China contributed about half the group’s sales and 46 per cent of net profit in 2008.
Reports quickly emerged that Wilmar had hired BOC International, Goldman Sachs and Morgan Stanley to handle the offering, which was targeted to raise US$3 billion by the end of last year or early this year. The listing application reached an advanced stage and Wilmar shares consequently went on a remarkable run, rising from $4.40 to almost $7 in September.
But in November Mr Kuok admitted that the company was shelving the listing until market conditions improved and the company could get the right valuations.
‘We will list the China operations only if it commands a better price than what Wilmar is commanding right now in the stock market,’ he told reporters then.
Some recent Hong Kong IPOs have performed poorly, even though the bourse raised almost US$20 billion last year in new listings. Metallurgical Corp of China fell 11.7 per cent on its Hong Kong debut on fears its share sale was overpriced.
SouthGobi, a Mongolian coal producer, fell 11 per cent from its offer price on its debut last Friday and UC Rusal, the aluminium group controlled by Russian oligarch Oleg Deripaska, also fell sharply on its debut last week, down 10.6 per cent in Hong Kong on the opening day. The listing had faced prolonged scrutiny from regulators there over Rusal’s ability to repay debt and a dispute with the government of Guinea over damages allegedly owed.
There are fears in the markets that official attitudes in China to the recent flood of new listings has hardened. A senior Chinese official said institutions were ‘irresponsibly’ driving up IPO prices of mainland listings and last week, China XD Electric became the first debutant to trade below its IPO price on opening day.
By CHEW XIANG
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