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Chinese baijiu distiller ZJLD eyes biggest Hong Kong IPO this year as share sale set to raise up to US$811 million

  • ZJLD Group on Monday started selling up to 490.7 million shares at a price range of HK$10.78 to HK$12.98
  • The IPO prices ZJLD at a higher price-earning multiple than bigger onshore-listed rival distillers

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ZJLD Group sells its products under four brand names including flagship Zhen Jiu. Photo: Company Weibo
Zhang Shidongin Shanghai

Chinese baijiu distiller ZJLD Group plans to raise as much as HK$6.37 billion (US$811.5 million) in an initial public offering (IPO) that would be the biggest in Hong Kong this year and would give international investors additional access to a growing market amid China’s consumption recovery.

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The Beijing-headquartered company, the fourth-largest privately owned baijiu producer in China based on data from Frost & Sullivan, on Monday started selling up to 490.7 million shares at a price range of HK$10.78 to HK$12.98, according to a statement to the Hong Kong exchange.
At the top of the range, the pricing would give ZJLD a market value of HK$42 billion, or roughly 2 per cent that of China’s biggest liquor producer Kweichow Moutai. The offering would also let global investors access China’s lucrative baijiu market at a price-earnings multiple of 47, compared with 35 to 27 times for onshore-listed market leaders Kweichow Moutai and Wuliangye Yibin, which are available to offshore investors via the Stock Connect scheme.
If it materialises, the flotation would surpass Beijing Sinohytec’s HK$1.1 billon sale as the city’s biggest IPO so far this year, according to Bloomberg data. It will also boost Hong Kong’s IPO market, which has raised only HK$6.9 billion in funds from 18 sales so far this year, as the city seeks to restore its status as a global fundraising venue with listing reforms after dropping to seventh place globally in 2022.
Flags fly outside Hong Kong’s Exchange Square building in Central, home of the Hong Kong stock exchange. Photo: Jelly Tse
Flags fly outside Hong Kong’s Exchange Square building in Central, home of the Hong Kong stock exchange. Photo: Jelly Tse

“We are positive on the baijiu sector throughout the year, and key to the argument is consumption that’s driven by the recovery in confidence,” said Shen Hao, an analyst at Huachuang Securities. “We’ve already seen the faster-than-expected pace of reducing inventories in the industry through the Lunar New Year holiday.”

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ZJLD said it will allocate 90 per cent of the offering to international investors, with the remainder reserved for Hong Kong traders, the statement said. Trading is expected to commerce on April 27. Goldman Sachs and China Securities International are the joint sponsors of the stock sale.

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