By Benjamin Robertson

Hong Kong investors will soon have something new to bite into as one of China’s largest biscuit manufacturers opens its order book ahead of a planned initial public offering.

Cayman Islands-registered Jiashili Group hopes to raise HK$370 million in a Hong Kong listing by issuing 100 million shares at HK$3.70 each. Ten million shares are available to local investors and a further 90 million shares will be offered overseas. The hoped-for windfall will represent 25 per cent of the company’s HK$1.48 billion market capitalisation, according to the prospectus.

Most of the company’s shares will remain under the control of Jiashili chairman and chief executive Huang Xianming, Huang’s wife, and his two sisters. In April, year, London-based private equity group Actis invested US$50 million in preferred shares and convertible debt.

The planned share offer comes as worrying economic data shows industrial output on the mainland grew 6.9 per cent year on year in August, a significant drop from 9 per cent in July, and the lowest growth level since 2008. Retail sales numbers and new home sales are also down year on year.

Jiashili will no doubt seek to counter any concerns by highlighting its product range, which includes mooncakes and shallot-flavoured biscuits, and that it mainly serves the mass market. It is China’s sixth-largest biscuit manufacturer with 3.1 per cent of the market, according to Euromonitor analysts.

Jiashili reported last year revenues of 747 million yuan (HK$943 million), a 15 per cent year on year increase, and a net margin of 9.3 per cent. The company had net current liabilities of 66.2 million yuan at the end of July and a further 4.4 million yuan liability in unpaid mandatory employee housing provident fund contributions, according to the prospectus.

Euromonitor forecasts China’s biscuit market will grow 5 per cent annually between 2012 and 2017.

IMAGE: Jiashili will no doubt seek to counter any concerns by highlighting its product range, which includes mooncakes and shallot-flavoured biscuits, and that it mainly serves the mass market. Photo: Xinhua

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