Uni-President China IPO may raise US$531 mil.
By Bei Hu, Bloomberg
November 27, 2007, 12:00 am TWN
Uni-President China Holdings Ltd., the mainland unit of Taiwan's biggest maker of processed food, may raise as much as HK$4.13 billion (US$531 million) from a Hong Kong initial public offering with its parent, said in a document.
Uni-President China and Uni-President Enterprises Corp. are offering a total 881.7 million shares at HK$3.75 to HK$4.68 each, said the share sale document sent to international institutions. The high end of the range for the sale of a 25 percent stake values Uni-President China at HK$16.5 billion, it said.
Uni-President China, the nation's largest maker of juice drinks and third-biggest supplier of instant noodles, is raising capital to expand, promote its brands and make strategic investments. Sales of pure fruit juices and diluted juice products in China averaged 12.5 percent annual growth to 11.8 billion yuan (US$1.6 billion) last year from 2004.
"I like their market shares in the drinks area, although the noodles business is kind of flat or going down," said Andy Mantel, Hong Kong-based managing director of Pacific Sun Investment Management Ltd. "The penetration rates for the tea, the juices and carbonated drinks are still very low."
Uni-President has been expanding sales of yogurt and drinks, also including tea, coffee and bottled water, to offset stagnant revenue and losses from instant noodles. Juice product sale in China, in particular, has benefited from rising household income, increasing health consciousness and improved product packaging, the share sale document said, quoting market researcher ACNielsen.
Six corporate investors, including companies controlled by Houston Rockets owner Leslie Alexander and Goldman Sachs Group Inc., agreed to buy a total US$120 million worth of IPO shares, the document said.
The growth rate in drink sales from 2004 to last year has outstripped the 7 percent annual increase for instant noodles, where 15-year-old Uni-President China initially made its name.
Uni-President China had the largest share of the market for juice products last year, the document said. Coca-Cola Co. surpassed it by taking a 21.6 percent share in the first nine months of this year, against Uni-President China's 20.8 percent.
About 60 percent of the shares being offered in Uni- President China's IPO are new and the rest are being sold by a company wholly owned by Uni-President Enterprises. The IPO may be expanded by as much as 15 percent to meet demand and stabilize the share price.
The sale values Uni-President China at as much as 38.4 times this year's forecast profit of at least 411 million yuan. That's more than triple last year's earnings.
Morgan Stanley and UBS AG are arranging the sale, which will be priced Dec. 7, according to the document. The stock will start trading in Hong Kong Dec. 17 under the ticker "220."