by winston » Mon Jun 15, 2015 7:18 am
Legend plans Hong Kong listing
By Chen Qingqing
Chinese investment firm Legend Holdings Corp is reportedly to raise $1.96 billion in an IPO in Hong Kong, a move which analysts said is intended to invest more in its core businesses besides information technology (IT).
The parent company of the world's largest PC maker Lenovo Group, Legend is expected to issue $353 million shares at a range of HK$39.8 ($5.13) to HK$43 each, taking orders from investors on Monday, the Wall Street Journal reported Friday.
It could be one of the largest IPOs in the Hong Kong stock market in 2015, according to the report.
Legend couldn't be reached for comment on Sunday by press time.
The group's upcoming roadshow in Hong Kong is expected to be significant as it will show Legend's intent to explore opportunities in different sectors besides IT in the near future, Wang Yaqian, an analyst from Beijing-based market research consultancy iResearch, told the Global Times on Sunday.
"Once listed, the company will benefit from a new investment channel," Wang said, noting that Legend could invest more in its financial services segments, which will financially support its core businesses such as real estate and agriculture.
According to the IPO prospectus filed to the Hong Kong Exchanges and Clearing Ltd by the group in April, Legend holds 31 percent of Lenovo's shares and has investments in five different financial services providers.
Besides, the company has proposed about 598 million yuan ($96.3 million) in addition to $58.5 million in 14 equity investments as strategic investment since January, while also targeting at an Internet medical service provider, the prospectus showed. The filing did not disclose the number or the price of shares to be listed.
Still, the core IT business, mainly comprising consumer electronics and cloud services, contributed about 94 percent to Legend's total revenue of 289.5 billion yuan in 2014, according to the filing.
After acquiring IBM's PC business in 2004, Lenovo has maintained a leading position in the global PC market, ranking as the largest PC vendor worldwide by shipments with 19.6 percent in the first quarter of 2015, according to a report issued by US market research firm International Data Corp in April.
The group's financial services and real estate investments accounted for less than 1 percent of the total revenue.
"Though the IT business is seen as Legend's pillar, the group needs to develop other businesses to try to become the Chinese equivalent of General Electric [GE]," Wang noted.
Liu Chuanzhi, founder of Legend, was quoted by Beijing-based magazine China Newsweek in May 2014 as saying that in terms of business diversification, he was inspired by GE.
Liu Dingding, an analyst from Beijing-based Internet intelligence agency Sootoo, echoed Wang's view, noting that Legend is seeking to reduce dependence on its IT sector, especially after the company has seen rising profits in other segments like car rental business.
China Auto Rental Holdings Inc (CAR Inc), in which Legend holds 64.49 percent stake, recorded 926 million yuan revenue in the first quarter of 2015, an increase of 37 percent from the same period in 2014, according to the company's financial report published in May.
Liu from Sootoo noted that in the next decade, Legend will expand its non-conventional businesses while maintaining its PC strengths.
Although the IT business accounted for a large part of Legend's total revenue, the gross profit margins of the company's property and chemical businesses both surpassed 30 percent of its total profit margins in 2014, he said. "Those are the sectors with potential for Legend."
Source: Global Times
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