Hong Kong: Chinese clothing retailers Bosideng International and China Dongxiang will raise as much as $1.54 billion in Hong Kong share sales as demand for consumer goods surges in the fastest-growing major economy.
Bosideng, which owns the top-selling down-clothing brand in China, may raise as much as 6.53 billion Hong Kong dollars, or $838 million, while Dongxiang, owner of Chinese rights to the Kappa sportswear brand, is targeting as much as 5.47 billion dollars, people familiar with the sales said Thursday.
Garment makers in China, the biggest exporters of clothing in the world, are benefiting from rising wealth at home that pushed retail sales growth to its fastest pace in more than three years last month. Consumer goods companies in the nation have raised $5 billion in Hong Kong share sales this year.
"I expect to see more consumer goods companies go public in Hong Kong," said Candy Huang, an analyst at Lehman.
Asia Apparel and sportswear companies "will continue to grow on rising income and consumption among the Chinese" and from the Olympics, she said.
Bosideng and HSBC's private equity arm plan to offer 1.99 billion shares, equivalent to a 25 percent stake, at between 2.56 dollars and 3.28 dollars a share, said people who declined to be identified before the release of an official statement.
Dongxiang and its shareholders plan to sell a combined 1.38 billion shares, equivalent to a 25 percent stake, at between 3.60 dollars and 3.98 dollars a share, according to an e-mail sent to investors Thursday.
Shares of Chinese apparel makers, especially those producing sporting goods, have benefited since listing in Hong Kong as they take advantage of surging salaries among from the rapidly expanding middle class in the country.
The sportswear industry in China is growing at a 23 percent annual rate and will reach 46 billion yuan, or $6 billion, in 2008, helped by increasing household income and the Olympics, Daiwa Institute of Research said in a June report. It cited Zou Marketing, a sports-branding consultancy.
Anta Sports Products , the largest maker of athletic shoes in China, has gained more than 60 percent since its stock started trading on the Hong Kong exchange July 10. Li Ning, the Chinese sportswear brand endorsed by Shaquille O'Neal, is trading at close to 64 times estimated earnings for this year, according to Bloomberg data.
Five-year-old Dongxiang, based in Beijing, owns rights to the Italian sportswear brand Kappa, best known for sponsoring soccer clubs including Juventus, in China and Macau.
Dongxiang does not own any factories. Like Nike and Adidas, it farms out production and sells products through more than 1,400 stores throughout the country operated by distributors.
"I really like the industry and don't think much can go wrong up to the Olympics and with a booming economy," said Sebastiaan de Bont, who manages emerging markets equities at Fideuram Asset Management in Dublin. Owning an international brand in China is "quite unique" and "an advantage."
Deutsche Bank and Merrill Lynch are arranging the sale of Dongxiang. Mark Bennewith, a spokesman for Deutsche Bank, and Rob Stewart, a spokesman for Merrill Lynch, declined to comment.
Bosideng traces its roots to 1975, when its now 55-year-old chairman, Gao Dekang, founded a clothing business with 11 villagers, according to a DBS report Sept. 8.
Bosideng's "Snow Flying," "Bosideng" and "Kangbo" brands commanded a 36 percent share of the Chinese market in apparel made with down last year. It is looking to enlarge its 6,844-store domestic distribution network and explore international expansion, the DBS report said.
Its main brand, Bosideng, has been the top-selling down garment brand by sales for 12 years.
"Bosideng will remain the market leader in China as I don't see any competitors catching up with it in the near term," said Vicky Lin, an analyst at CSC Securities Hong Kong
The sale of Bosideng is being arranged by Goldman and Morgan Stanley. Connie Ling, a spokeswoman forGoldman, and Nick Footitt, a spokesman for Morgan Stanley, declined to comment.
Separately, Beijing Enterprises, the city-backed owner of toll roads, a brewery and utilities, plans to raise as much as 3.81 billion dollars selling shares in Hong Kong, according to an e-mail sent to investors Thursday, while Hidili Industry International Development said that it raised 4.1 billion dollars in an initial share sale in Hong Kong.
Hidili sold 600 million new and existing shares at 6.83 dollars each, the coal company based in Panzhihua, southwest China, said Thursday. Hong Kong individuals sought about 670 times the number of shares initially set aside for them, people familiar with the share placement said, while international institutions ordered more than 180 times the number of shares set aside for them.
Kerry Properties, a builder controlled by the family of Robert Kuo, a Malaysian tycoon, may raise 3.59 billion Hong Kong dollars, or $461 million, by selling stock, according to an e-mail sent to fund managers.
Kerry Properties is selling 60 million new shares, equal to 4.3 percent of the company once the offer is completed, at 58.05 dollars to 59.86 dollars each, according to the e-mail, a copy of which was obtained by Bloomberg.
"The company may need capital to expand in China," said Albert Cheng, an analyst at Quam. "Returns from Chinese properties, especially high-end commercial projects, are more attractive" than Hong Kong investments, he said.
Hong Kong-listed builders are taking advantage of rising stock prices to sell shares to fund developments in the city and in mainland China. Shares of Kerry Properties surged 8 percent to 62.35 dollars Wednesday. The stock climbed 72 percent this year, beating the 28 percent gain of the Hang Seng index.
Calls to Kerry Properties were not immediately answered. Citigroup is arranging the sale. James Griffiths, a spokesman for Citigroup in Hong Kong, declined to comment.
Kerry Properties said in June that it had paid 2.77 billion yuan, or $369 million, for land in the northeastern Chinese city of Shenyang. The site of 172,800 square meters, or 1.9 million square feet, has 30 percent designated for residential use with the rest for commercial purposes.
