HK media firm Most Kwai Chung soars on debut; IPO tops popular list

Most Kwai Chung

28/03/2018 07:30

HONG KONG, March 28 (Reuters) - Shares in Hong Kong
satirical media group Most Kwai Chung Ltd  1716.HK  leapt 880
percent on their debut in the city on Wednesday after the
company's initial public offering (IPO) set a new record for
investor subscriptions.
    The gains gave the company a market valuation of HK$1.96
billion ($249.80 million) - vaulting it far above established
media groups such as Sing Tao News Corp  1105.HK  with a market
capitalisation of $112.6 million and Hong Kong Economic Times
Holdings Ltd  0423.HK  at $77.6 million. 
    Most, which describes itself as an advertising and media
services provider, attracted attention on Tuesday when the
retail public offering portion of 6.75 million shares was 6,289
times subscribed, making it Hong Kong's most popular ever IPO
among retail investors. 
    The company is best known for its weekly satirical magazine,
100Most, launched in 2013 and aimed at a younger audience. 
    While revenues have been growing sharply as Most expanded
its digital offering, profit fell 84 percent in the eight months
to end-November as a result of the costs of preparing for the
IPO and a related tax hit, the company said. 
    The shares, which priced at HK$1.2 apiece and opened at
HK$8.40, shot as high as HK$11.76 in early trade before trimming
gains to HK$7.18 for a 498 percent gain by the lunch break. The
benchmark Hang Seng Index  .HSI  meanwhile fell 1.5 percent.    
 
    A total of 151.2 million shares changed hands by the lunch
break - more than twice the 67.5 million sold in the IPO. 
    "The rally totally couldn't be judged by fundamentals. It
was purely speculation with punters joining in for a ride aiming
for quick profit," said Steven Leung, a sales director at UOB
Kay Hian. "If you have the stock, take profit; if you don't have
the shares, don't chase them."
     Most's IPO raised HK$81 million. After taking out 26
percent of the proceeds to cover the costs of listing, the
company said the remaining funds would be used to fund mergers
and acquisitions, to expand business operations and its customer
base as well as to upgrade its TVMost website, mobile
application and internal IT system.
    Most is the latest in a series of hot floats in Hong Kong to
have attracted retail investor attention. Its over-subscription
rate placed it far ahead of the previous record holder, club
operator Magnum Entertainment, now called AUX International
Holdings Ltd  2080.HK , whose HK$126 million IPO in January 2014
was 3,559.2 times subscribed.
    Most chairman Iu Kar Ho, executive director Luk Ka Chun and
Tsui Ka Ho are controlling shareholders holding an aggregate
67.5 percent of the company.
    Ever-long Securities Co Ltd was the sole bookrunner and sale
lead manager of the issue.

($1 = 7.8463 Hong Kong dollars)

 (Reporting by Donny Kwok
Editing by Christopher Cushing)
 ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters
Messaging: donny.kwok.reuters.com@reuters.net))