ZJLD shares opened at HK$9 compared to the issue price of
HK$10.82 each. The stock sank to a low of HK$8.82 in the
afternoon before it ended at HK$8.88, still down 17.9% from the
IPO price. That compared to a 0.4% gain in Hong Kong's Hang Seng
Index .
The IPO price was at the lower end of the HK$10.78 to
HK$12.98 per share range indicated to investors when the deal
was launched.
ZJLD produces baijiu, the clear distilled spirit popular
across China. The drink is considered China's national liquor
and is the world's most consumed liquor, according to ZJLD's
prospectus.
"The tepid listing would probably fail to lift the ECM
(equity capital markets) sentiment in Hong Kong and deals in the
second half would probably need to come in at a more digestible
valuation to garner a successful listing," said Clarence Chu, an
Aequitas Research analyst who publishes on Smartkarma.
ZJLD's three major baijiu rivals, led by Kweichow Moutai , have seen shares fall by between 7.6% and 22% since
late January.
"The fall on debut is an adjustment of the relatively high
pricing and is in line with the soft market," said Linus Yip,
chief strategist at First Shanghai Securities referring to the
softer premium baijiu sector and broader Hong Kong market.
There was just $508.3 million worth of new share sales in
Hong Kong in the first quarter, according to Refinitiv data,
down from $1.2 billion in the same period last year.
Institutional investors subscribed for 3.9 times the amount
of ZJLD shares on offer in that tranche, according to the firm's
filings, which was above many other Hong Kong IPOs this year.
(Reporting by Scott Murdoch in Sydney and Donny Kwok in Hong
Kong; Editing by Muralikumar Anantharaman and Jamie Freed)
(Update closing stock price)
By Scott Murdoch and Donny Kwok
April 27 (Reuters) - Chinese spirit maker ZJLD Group's shares ended down 18% on their first day of trading on
Thursday, dampening hopes that a positive debut for the largest
new share sale in Hong Kong in 2023 could spark a rush of
listings in the second half.
The KKR-backed company raised $675.2 million last week in
the biggest new share sale in Hong Kong since CALB Group Co raised $1.3 billion in October.
Dealmakers had hoped a strong first day performance by ZJLD
could give companies looking to list in Hong Kong confidence to
press ahead with new deals and help revive the city's weak IPO
market.
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