China Putian Food Holdings opens for retail subscriptions today, aiming to raise HK$306 million in an initial public offering in Hong Kong.
The Fujian-based company is an integrated pork supplier, being involved in farming, slaughtering and the sale of pork.

But with only one hog farm of its own in operation, Putian has to rely heavily on five contracted suppliers, which were accounting for 90.1 percent of the total output of hogs as of September 30 last year.

To reduce its dependence on outside suppliers and to strengthen its business, the company plans to build six additional farms funded by 62.6 percent of the IPO proceeds - HK$189.7 million.

The new farms are expected to be operational in the second half of next year with a capacity of 374,500 "commodity hogs" a year - at least 10 times the current output.

Putian also intends to expand its retailing network by setting up more sales points. Most would be in supermarkets, including Walmart outlets in China. Another 12 sales counters will be added by the end of this year.

Putian sold its pork at 25.4 yuan (HK$31.26) per kilogram as of September 31, up by 26.4 percent on 12 months earlier. "Prices are expected to stabilize this year and may rise slightly next year," said chairman and chief executive officer Cai Chengyang.

The company set the IPO's indicative price range between HK$1.09 and HK$1.53 per share, representing a price-to-earnings ratio of 7.7 times to 10.8 times.

A minimum one board lot of 2,000 shares costs HK$3,090. Bookbuilding closes on March 5 and trading debut is set for March 9.