Investors oversubscribe Shineway retail shares
By Ma Wei (China Daily)
Updated: 2004-12-03 10:12

HONG KONG: Modern Chinese medicine maker Shineway Pharmaceutical Group made its debut yesterday in Hong Kong, with its retail portion of shares 231 times over-subscribed by investors.

The Hebei-based company, which produces traditional Chinese medicine (TCM) using modern technology, increased the retail portion of share offering to 50 per cent from 10 per cent after public investors subscribed for the shares enthusiastically.

The private pharmaceutical group sold 200 million shares, or 25 per cent of its enlarged share capital, at HK$4.36 each, the top price of an indicated range of HK$3.55 - HK$4.36 (45 - 56 US cents).

The price was 15 times 2004 earnings of HK$0.29 per share, similar to that of Tongrentang Technologies, another Hong Kong-listed TCM maker. The gross listing proceeds amounted to HK$872 million (US$111.8 million).

Cazenove was the global co-ordinator, bookrunner and sponsor of the Shineway deal.

"The successful listing marked a milestone in our business development," said Li Zhenjiang, chairman and president of Shineway Pharmaceutical.

China's traditional medicine sector, worth 75 billion yuan (US$9 billion) last year, is highly fragmented, with the 10 largest participants accounting for just over 20 per cent of the market.

"Looking to the future, we will strive to increase our market share by strengthening the marketing of our brand, developing more new medicines and expanding our sales network in the mainland," the chairman said.

In addition, the company will try to reap maximum benefits through economies of scale.

It would expand facilities for the extraction of ingredients from herbals to make Chinese medicine, upgrade the production of injections, soft capsules and granule products.

Asked about the impact of the Skyworth Digital scandal on the reputation of the mainland's private companies, Li said he was not worried.

"I am very confident that the incident will bring no negative influence to our group," he said.

"Shineway has had very strong results and would increase investment for products with higher profit margins."

Li pledged that as a private enterprise, Shineway would obey the rules of the central authorities.

He also said he was very confident about regulations in Hong Kong.

Shineway generated more than 80 per cent of its revenue from the sales of seven Chinese medicines. It said it might acquire rivals with production capacity and distribution networks.

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