Magnum Rallies as Investors Chase Hong Kong Nightclub IPOFox Hu
Magnum Entertainment Group Holdings Ltd., the first nightclub operator to go public in Hong Kong, more than doubled on its first day of trading.
The stock jumped as high as HK$3.21 from its offer price of HK$1.50, and traded at HK$2.87 at 2:41 p.m. Magnum received orders for 3,559 times the stock available to retail investors in an initial public offering, according to a filing yesterday.
The company operates Beijing Club, Billion Club and Magnum Club in Lan Kwai Fong, a bar area in Hong Kong’s Central district popular with tourists and locals alike. It pulled off one of Hong Kong’s most popular IPOs among individual investors, surpassing the 2,180 times subscription ratio for Milan Station Holdings Ltd.’s May 2011 share sale.
“Among listed companies, Magnum has unique business and impressive profit margins,” said Nelson Yan, a fund manager at Hong Kong-based Special Fine Investment & Management Ltd. “All the three clubs are quite popular in Hong Kong, setting it apart from ordinary caterers.”
Magnum had a gross margin of 81.7 percent and a net profit margin of 16.1 percent in the year ended March 31, according to its IPO prospectus. The company raised $16.3 million in the offering after pricing its shares at the top end of a marketed range, according to data compiled by Bloomberg.
Chairman Yip Mow Lum owns 72 percent of the company after the IPO, the prospectus showed.
In the last 12 months, three companies more than doubled on their trading debuts in Hong Kong after IPOs worth at least $10 million, data compiled by Bloomberg show. RM Group Holdings Ltd., a distributor of health supplements that raised $17.9 million in October, surged 161 percent on its first day of trading.
Anglo Chinese Corporate Finance Ltd. and Bocom International Securities Ltd. managed the Magnum sale, according to the prospectus.