Yue Yuen Industrial Holdings, which makes shoes for brands such as Nike, Adidas and Puma, plans to raise about US$1 billion from the spin off of its mainland retail business in Hong Kong by February, market sources said.
Yue Yuen filed for the listing of subsidiary Pou Sheng International (Holdings) on the Hong Kong stock exchange on December 12. Yue Yuen shareholders still have to approve the proposed deal.
'Their retail business is in very good shape but Yue Yuen is trading at an industrial stock level of 15-16 times [price-earnings] while Anta [Sports Products] is close to 40-50 times,' said Shadow Lau, an analyst at Kim Eng Securities. 'If they spin it off they can capture or unlock the value of the retail business.'
Anta, a mainland shoe and sportswear label, raised US$405 million in July. Its shares have almost doubled in price since then and now trade at 48.8 times price-earnings. Investors have clamoured for such stocks because they expect companies in the mainland consumer sector to profit from rising incomes.
Yue Yuen manufactures for more than 10 domestic and international sportswear brands. Last year, 58 per cent of all sales were generated from selling athletic shoes, followed by revenues from sales of casual shoes for brands such as Hush Puppies and Columbia, that accounted for 18 per cent of sales.
About 38 per cent of sales were to the United States, while Asia accounted for 30 per cent of sales.