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Gourmet Master listing price set at NT$168

2010/11/15 18:30:59

Taipei, Nov. 15 (CNA) Taiwan-based Gourmet Master Co., Ltd.,which runs the popular 85℃ Cafe chain, has set the price for itsprimary listing at NT$168.00 (US$5.56) after a public subscriptionwas warmly received by the market, underwriter Yuanta Securities saidMonday.

The stock is scheduled to make its debut on Taiwan's stockexchange on Nov. 22.

The Cayman Islands-registered company offered 3.85 million sharesfor the public subscription, which ended Friday, triple thepreviously planned 1.28 million shares because of investorenthusiasm, Yuanta Securities said.

According to the underwriter, the share sale before the listingwas more than 200 times oversubscribed.

The NT$168 price set for the listing is also higher than theNT$158.00 target the company had tentatively proposed in itsprospectus published in October. It is hoping to raise about NT$650million from the public listing.

Gourmet Master operates coffee shops in Taiwan, China, Australiaand the United States, providing coffee, tea, cakes and bread. About60 percent of its total revenue comes from China, where it has 150outlets.

The company had net income of NT$758 million in 2009, up about130 percent from 2008, according to the prospectus.

In the first three quarters of 2010, Gourmet Master had netearnings of NT$634 million, equal to an EPS of NT$4.95, theunderwriter said.

A year earlier, it reported net income of NT$758 million in 2009,up about 130 percent from 2008, according to the prospectus.

The coffee chain said it will use the proceeds from the listingprimarily to expand its operations worldwide, including addingoutlets and recruiting research and development staff and bakers.

The company is also hoping to open an additional 100 stores inChina in 2011 to take advantage of rising Chinese demand, part of aplan to bring the total number of outlets worldwide to 600.

MasterLink Securities analyst Tom Tang said he expects thebooming China market to boost Gourmet Master's EPS for 2010 toNT$7.5-NT$8.0.

"Investors favor the stock as the company has close business tieswith China. It has become kind of one of the China concept stocks, "Tang said.

The analyst believed, however, that the listing price of NT$168was too high compared with other food counterparts in the localbourse in terms of valuation.

"It remains to be seen whether the company will continue to postsignificant growth in its bottom line as China, though it is agrowing market, is full of fierce competition," Tang said.

"Investors should be cautious in buying the stock," he said.

(By Tien Yu-pin and Frances Huang)