[Reuters] E-Land plans to raise up to $369 mln in HK IPO

UPDATE 1-E-Land plans to raise up to $369 mln in HK IPO
Wed Apr 23, 2008 10:34am IST

(Adds details)

By Kennix Chim

HONG KONG, April 23 (Reuters) - Retailer E-Land Fashion China Holdings Ltd, a spin-off from South Korea's E-Land World Ltd, plans to raise as much as $369 million in a Hong Kong initial public offering as the stock market rebounds.

The women's apparel retailer, which kicks off a marketing roadshow on Wednesday, is Hong Kong's second IPO since March and will be closely watched after the poor trading performance of this year's market newcomers. For a related story, click [ID:nHKG285789]

The company is selling 496.3 million shares, or 25 percent of its enlarged share capital at HK$3.80-HK$5.80 each, according to a document obtained by Reuters that details the terms of the deal. Of the shares on offer, 60 percent are new shares and 40 percent are existing shares.

E-land focuses on managing a portfolio of seven women's apparel brands including E-Land, Scofield and Teenie Weenie, which are operated under a licence from its parent. The company plans to increase the number of brands under its portfolio to 10 by the end of 2010.

E-Land has an overallotment option to issue 74.4 million shares, or up to 15 percent of the offering, all of which would be secondary shares, the document said.

The price range represents a price-to-earnings multiple of 15 to 22.8 times UBS's earnings forecast for 2008.

By comparison, high-end luxury apparel retailer Ports Design (0589.HK: Quote, Profile, Research) trades at 26.4 times 2008 forecast earnings. Other peers include Esprit (0330.HK: Quote, Profile, Research) and Giordano (0709.HK: Quote, Profile, Research), which trade at 18 times and 15 times, respectively, 2008 forecast earnings.

E-Land will start its Hong Kong public offering on May 2, with a trading debut scheduled for May 16.

Its IPO comes as Hong Kong's benchmark index .HSI rebounds after losing 18 percent in the first quarter of the year. The index was up nearly 1 percent on Wednesday.

The company has 1,084 outlets in 428 department stores in 125 cities across China. It plans to add 1,200 retail outlets within three years, UBS (UBSN.VX: Quote, Profile, Research), which is one of its sponsors, said in a research report.

The firm outsources nearly all of its manufacturing to independent third parties in China.

UBS estimates the firm could post 452 million yuan ($64.66 million) in net profit in 2008, a 56 percent increase over last year.

Goldman Sachs (GS.N: Quote, Profile, Research), UBS and Citigroup (C.N: Quote, Profile, Research) are sponsoring the deal.

(US$1=HK$7.8=6.99 yuan)

(Reporting by Kennix Chim; Editing by Anne Marie Roantree)