CHINA Quanjude (Group) Co Ltd said it will raise 410 million yuan (US$55.4 million) in its initial public offering to fund expansion.
The roast-duck chain operator will issue 36 million shares, or 25.4 percent of the firm's enlarged share capital, at 11.39 yuan per share on the Shenzhen Stock Exchange starting on Monday, the company said in a statement to the Shenzhen bourse yesterday.
The price was in the low-end of its indicative range and implied a price-to-earnings ratio of 29.97 times the company's diluted earnings for last year after the share sale, the statement added.
Beijing-based Quanjude has received 136 price offers during its booking, which ended on Wednesday with an indicative price range between 8.40 yuan and 25 yuan.
The company said net proceeds from the IPO will reach 388 million yuan.
"The trading price is not at the top range as investors may still be concerned about the profitability of the restaurant industry despite Quanjude's famous brand," said Cheng Li, analyst from China Galaxy Securities Co Ltd.
Founded in 1993, Quanjude Group is 48.4 percent owned by Beijing Tourism Group. It has nine company-owned restaurants in cities such as Beijing and Shanghai and 61 franchised outlets, including five overseas.
The company sells more than two million roast ducks on average each year.
For the first quarter, sales revenue was recorded at 188 million yuan while net profit was 25.62 million yuan.
Last year, it had sales revenue of 666 million yuan and generated a net profit of 56.67 million yuan. The company said the capital raised from the share sale will help to fund the renovation of two restaurants in Beijing ahead of the Olympic Games, expand its food-processing plants and develop its franchised restaurants.