China Tourism Group Duty Free has received approval from the Hong Kong stock exchange’s listing committee for its flotation on the main board, according to a filing late on Tuesday.
The company aims to raise around US$2.7 billion in what could be the biggest initial public offering (IPO) in HK this year, according to market sources.
The company’s mainland stock has lost at least 7.8 billion yuan (US$406 million) in market value so far this week as Covid-19 disruptions took hold in Hainan province.
This marks the second attempt by the world’s largest travel retailer by sales to sell shares in Hong Kong, after it shelved the plan in December, citing sluggish market conditions.
The company operates five duty-free shops in Hainan and has one under construction in the provincial capital, Haikou. It also operates the world’s biggest duty-free complex in Sanya and accounts for about 90 per cent of the market there. Hainan is expected to account for half of a US$40 billion duty-free market by 2025.
Although the pandemic has dented duty-free sales, the market still shows strong growth momentum, said Kenny Ng Lai-yin, Everbright Securities International strategist. “The company’s sales scale takes the lead in the industry,” he said. “Coupled with the industry’s licensing barriers, investors’ response to the IPO will be better than the overall IPO performance in the first half of this year.”
China Tourism plans to use the proceeds from its IPO to invest in new stores at airports, border crossings, railway stations and seaports. It will also spend some of the funds to expand downtown duty-free stores in Haikou and Sanya.
State-owned CTG, previously known as China Travel Agency Hong Kong, is China Tourism’s controlling shareholder, with a 53.3 per cent stake.
CICC and UBS are joint sponsors of the deal.
Source: South China Morning Post
