Sociedade de Jogos de Macau Holdings Ltd., a casino operator part-owned by Stanley Ho Hung-sun, will go ahead with a $500 million initial public offering in Hong Kong after scrapping plans for a $1 billion float in February.
SJM Holdings is marketing 1.25 billion new shares at 3.08 Hong Kong dollars to 4.08 Hong Kong dollars, or 40 cents to 52 cents, in an effort to raise at least 3.8 billion Hong Kong dollars, or $486 million, according to a sale document sent to investors Monday.
The price range represents nine to 12 times the company's earnings this year, down by nearly half from the 20 to 22 times earnings proposed in February before weak market conditions abetted the float's withdrawal.
In the first quarter of fiscal 2008, SJM Holdings' market share totaled 28 percent, down from 42 percent during the same period in 2007, according to a report prepared by Deutsche Bank, which is serving as sole broker on the company's I.P.O.
The bank's report said shares in Asia-Pacific gaming operators trade on average at 15.5 times forecast earnings, while license holders in Macau trade at 50 times.
Despite a positive evaluation from Deutsche Bank, the float, pre-marketing for which began last week, has only managed to draw a "lukewarm response," The South China Morning Post said Wednesday, Hong Kong time.
The bank has said SJM Holdings, one of six licensed casino operators in Macau, is expected to generate net profits of 1.53 billion Hong Kong dollars, or $196 million, in fiscal 2008.
Trading is set to begin on July 10.