COMPANY TO WATCH: CHINA HUIYUAN JUICE/CHINA
China Huiyuan Juice, based in Beijing, raised more than $300 million in an initial public offering in Hong Kong in late February, and its shares soared 66% in their first day of trading. Individual investors ordered 938 times the shares initially offered to them. Investors paid 53 times the company’s forecast-2007 earnings to obtain shares in China’s leading maker of pure juice.
Groupe Danone, the French food and beverage firm, also subscribed for shares in the IPO, increasing its stake to 24.3%. “The China fruit juice market is experiencing strong growth, and we are excited to be part of this,” says Emmanuel Faber, chairman for Danone in the Asia-Pacific region. “We believe supporting and developing strong local brands such as Huiyuan Juice is key to our success in China.”
Last year Danone’s sales in China exceeded $1.7 billion and accounted for more than 10% of the group’s global sales. Faber says Danone works closely with local partners to develop profitable businesses and to provide nutritious products to Chinese consumers.
UBS, the underwriter of the Huiyuan Juice IPO, said in a research report that the company’s production capacity is likely to grow 7% next year to 1.5 million tons annually.