Event:
Suning will issue 54m new restricted shares in the form of private placement to fund future construction of outlets and a logistics center, according to its prospectus disclosed today.
Comments:
New shares will come into the market on May 23 and can be released into circulation via application one year after completion of the issuance process (May 22). The company placed new shares at a price of Rmb45 apiece (83.85% of 20-day average and 85.39% of previous close before release of the prospectus) and raised funds of Rmb2.43b. Purchaser of new shares were CITIC Securities (600030), GF Fund Management, China Asset Management, Penghua Fund Management, Rongtong Fund Management and ICBC Credit Suisse Asset Management.
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As statistical data shows, appliance updating is proceeding in tier-one cities while appliance consumption has considerable room for future development in secondary and tertiary cities. Foreseeing remarkable growth potential for the consumer electronics market, Suning will see from its economies of scale and strong back-office support to benefit from the fast-growing sector. Given new share issuance, we forecast 08-10E EPS to be Rmb1.69, Rmb2.30 and Rmb3.11 respectively and maintain our OVERWEIGHT rating on the stock.