Gourmet Master Co (美食達人), which operates the popular 85°C (85度C) bakery and coffee chain in Taiwan, China, Australia and the US, yesterday saw its shares surge 138 percent on its main bourse debut to NT$400, compared with the benchmark TAIEX’s 0.83 percent rise.
The much-touted initial public offering (IPO) was oversubscribed 200 times by the public, with each application standing only slightly over a 1 percent chance of landing stock.
In a move to fund overseas expansion by opening 100 more outlets in China next year, Gourmet Master issued 3.85 million shares for its IPO, with one share set at NT$168.
PHOTO: MAURICE TSAI, BLOOMBERG
“Investors are pinning hopes on the company’s expansion into the Chinese market,” Grand Cathay Investment Services Corp (大華投顧) chairman Tu Jin-lung (杜金龍) said. “People believe in these China leads and they are eager to jump on the bandwagon.”
Gourmet Master president and general manager Wu Cheng-hsueh (吳政學) said on Thursday last week that the company would have 170 85°C outlets in China by the end of this year. The firm aims to expand to more Chinese cities and have a total of 1,000 stores by 2016, he said.
The Chinese business produced 43 percent of Gourmet Master’s total revenue last year. The percentage is expected to rise to 57 percent this year and further to 68 percent next year, Macquarie Equities Research said in a report on Wednesday last week.
“Gourmet Master has established a strong foothold in the most prosperous eastern China region. We expect significant earnings growth, as Chinese consumption of bakery products and coffee is set to grow,” Macquarie said.
It gave Gourmet Master an “outperform” rating with a target price of NT$300.
Judging from the significant gains in the share price, Taiwan International Securities Corp (金鼎證券) analyst Michael Chiang said he suspected buying largely came from institutional investors.
“Today’s closing price was much higher than the range of NT$250 to NT$300 anticipated by the market,” Chiang said. “I’m guessing institutional investors, including foreign investors, served as the major force pushing up the share price.”
Chiang predicted that -institutional investors would likely continue to hold the stock because of their upbeat outlook over the company’s bottom line.
“The price tag of NT$400 is by no means a ceiling for the stock in the near term,” he said.
Gourmet Master posted NT$758 million (US$25 million) in net -income, or NT$5.80 earnings per share (EPS) this year, up about 130 percent from 2008. Macquarie predicted the company’s EPS would hit NT$6.92 this year and NT$9.91 next year.
Gourmet Master’s initial share sale is the second-largest on the local bourse so far this year, -second only to the NT$6.2 billion raised by TPK Holding Co (宸鴻) last month. TPK’s share price also more than doubled on its first day of trading in Taipei and rose 3.9 percent to NT$566 yesterday, compared with its IPO price of NT$220.
“The enthusiastic response the new stocks received from the Taiwanese market should lure more foreign companies to trade on the local bourse,” Yuanta Securities Co (元大證券) investment and corporate banking chief Sam Lee (李明山) said.
Yuanta was the underwriter for both Gourmet Master and TPK.
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