Shares of Peak Sport plunge 17.07% on HK debut

Sep. 30, 2009 (China Knowledge) - Peak Sport Products Co Ltd<1968>, which has the largest market share in China's basketball footwear market, opened at HK$3.7 per share yesterday on its first trading day on the Hong Kong Stock Exchange, 9.8% lower than its issuing price of HK$4.1 per share, and plunged 17.07% to HK$3.4 per share, sources reported.

The enterprise raised HK$1.7 billion in its initial public offering, 14% more than the originally expected HK$1.5 billion. Excluding the over-allotment option, the number of Peak Sport's total shares is 2.1 billion, and its market value is HK$8.6 billion.

According to the prospectus, the company will use 48.3% or HK$821 million of the proceeds from the IPO to place advertisements, will invest 15.6% or HK$265 million in its sales network and will spend the remaining 27% or HK$459 million to increase productivity and support research and development.

Peak Sport is one of several Hong Kong-listed Fujian-based sport firms, which also include Anta Sports Products<2020>, Xtep International Holdings Ltd<1368> and 361 Degrees International Ltd<1361>.

CEO Xu Zhihua said that the firm's gross profit margin was 38.2% in the first half of this year, and that the company plans to increase its gross profit margin to 40% within two years. Peak Sport also intends to open 1,000 chain stores by the end of next year, Xu added.