JS Global pulls Hong Kong listing amid trade gloom

Household appliances maker JS Global Lifestyle Company Ltd pulled its initial public offering of up to HK$3.62 billion ($464 million) on Saturday, the third float delayed in Hong Kong so far this year, two sources told Reuters. The IPO is among a handful of recent offerings seen as tests of investor sentiment as markets are already on edge amid a trade dispute between the United States and China.

JS Global, which owns Chinese kitchen-appliances maker Joyoung and US home-appliances maker SharkNijia, informed investors on Friday that it planned to price the IPO at the bottom of the indicative range of HK$5.55 to HK$7.25 a share, the sources said. That meant the company could raise about $355 million by selling 500 million primary shares at HK$5.55 apiece.

However, sources said that while the books were covered for the IPO earlier this week, JS Global could not secure enough solid orders and had to cancel the deal. Investors generally put in orders for more shares than they actually expect to receive in an effort to ensure they get a good allocation. Deals where those investors end up with more than their real demand often trade poorly to begin with or have to be cancelled as they are not allocable.

Investors have been wary of the impact of the trade war on the consumer sector, with Chinese consumers scaling back purchases on everything from smartphones to furniture, as income growth slows and debt levels creep higher. "The company has been trying to sell a story about US-China synergy, but several investors are concerned that trade tensions would weigh on its business prospects in both countries," said one of the sources. "Even at the low end, the deal is still not appealing enough." The marketed price range represented a multiple of 11.5-15 times JS Global's forecast 2020 earnings, said sources, who declined to be identified as they were not authorised to speak on the matter.

JS Global did not immediately respond to a request for comment. The IPO is the third sizable deal delayed in Hong Kong so far this year. AB InBev, the world's largest beer maker, pulled an IPO of its Asia-Pacific unit in July but then last month floated the business in the city's biggest listing this year.