Anhui-based Qiaqia Food Co landed Wednesday on the ChiNext for first day trading, becoming the first snack producer listed on the Chinese A-share market.
Qiaqia Food, China's largest producer of roasted seeds and nuts, issued 50 million shares, raising a total of 2 billion yuan ($304 million), or 25 percent of the company's total equity after the initial public offering. Its issue price 40 yuan ($6.09) is about 54.14 times of its 2010 earnings per share after the issuance.
After the listing, Chen Xianbao, the largest shareholder with a 34.31 percent stake or 51.46 million shares, has become a billionaire, just like many other owners of small- and medium-sized companies listed on ChiNext. China's Nasdaq launched in second half of 2009.
Qiaqia's stock price on its first trading day, however, fell to 38.22 yuan ($5.82), down 4.45 percent from its issue price.
Established in 1995, Qiaqia mainly produces roasted seeds, such as sunflower, watermelon and pumpkin seeds, as well as peanuts and beans.
Though the company's sales revenue declined 18.7 percent in 2009 over the previous year due to weak consumption during the global financial crisis, Qiaqia attained 30 percent growth with revenues of 2.14 billion yuan ($326 million) in 2010. Qiaqia had a net profit of 161.72 million yuan ($25 million) in 2010, up 51 percent from 2009.
Market analysts have projected good prospects for the company.
"It is the market leader and will benefit from the industry's stable growth," said Wang Siyu, a food sector analyst with Tx Investment Consulting Co.
The roasted seed and nut market had a compound annual growth rate of 13.06 percent since 2005 to 32.2 billion yuan ($5 billion) in 2009, according to Founder's Securities report in February. Qiaqia has a 5 percent market share.
"Industry revenues will grow 10 percent annually in the next five years by any conservative estimation, Chen Guangyao, a food and beverage analyst with Founder Securities, stated in his report.
However, the reasonable price range given by many securities firms including Founder Securities, Tx Investment Consulting and China Merchants Securities is between 28.5 yuan to 37 yuan ($4.3 to $5.6), lower than Qiaqia's 40-yuan ($6.09) issue price.
Some analysts say Qiqqia's simple product structure that relies heavily on its roasted sunflower seeds products, may prove risky, Xinhua News Agency reported in January.