Prada Latest To Pursue Hong Kong IPO
In the wake of the recent Chinese New Year holiday, during which luxury brands recorded impressive sales in mainland China and Hong Kong, Aaron Fischer, regional head of consumer research at CLSA Asia Pacific Markets, tells CNBC this week that he believes Hong Kong-listed retailers are best positioned to capture the mainland’s demand for high-end merchandise. Pointing out examples such as Emperor Watch & Jewellery, cosmetics retailer SaSa International, department store operator Parkson Retail, and the French cosmetics chain L’Occitane, Fischer notes that these Hong Kong-listed companies are likely to benefit greatly from growing spending power in the Chinese mainland, since “a greater percentage of their earnings are derived from Chinese customers.” Additionally, their mid to high-end product mix “offers accessibility to a wider range of consumers,” including the country’s rapidly growing middle class.
So, if Fischer is right in asserting that consumer-focused companies that pull roughly 50% or more of their revenue from the Greater China market would benefit from a Hong Kong listing, could we soon see more foreign luxury brands following L’Occitane’s lead? While an “influx” is unlikely, several companies were no doubt heartened by the $704 million raised in L’Occitane’s initial offering last May, and the strong performance of its stock since then. Having made clear its intention to undertake a massive expansion effort in mainland China, and recently holding its first catwalk show outside of Europe at the Central Academy of Fine Arts in Beijing, the Prada group — owner of the titular brand, as well as Miu Miu and Church’s — is on its way to becoming the first major luxury apparel brand to file in Hong Kong. According to the FT, citing industry sources, Prada is expected to list on the Hong Kong stock exchange “as early as May.”
While Prada is the first of its kind to eye a Hong Kong listing, it’s doubtful that it’ll be the last, particularly if its listing takes off like L’Occitane’s. So who else could benefit from a similar listing? Though none of these companies appear to be in any rush to list, here are some ideas from the Jing Daily team:
– Swarovski: This privately owned Austrian crystal specialist, whose Greater China sales were instrumental in helping it weather the global financial crisis, is “rapidly becoming a household name in China,” said Vice President of Travel Retail Peter Zottl in 2009. Over the past six years, Swarovski has more than doubled its locations in mainland China, and currently operates more than 100 free-standing boutiques in 32 regions and provinces throughout the country. Last year, Swarovski made a splash in Hong Kong, collaborating with Hong Kong retailer JOYCE, Rodarte, and actress Maggie Cheung on a set of one-of-a-kind dresses auctioned off to benefit UNICEF.
– Armani: Crowned “Best Fashion Label” in the recent Hurun Report “Best of the Best” awards, Armani is one of the most popular brands among wealthier mainland China, particularly among men.
– Chanel: China’s elite is driving sales for this privately-held French powerhouse, which currently ranks as the second most-desired brand after Louis Vuitton, according to Bain & Co. Recently launching its “Culture Chanel” exhibition at the Museum of Contemporary Art Shanghai (Moca), Chanel has made no secret of its interest in tapping the Chinese market, holding its “Paris-Shanghai” exhibition at Plaza 66 in Shanghai last July, opening specialized watch boutiques, and showing Karl Lagerfeld’s “Maison d’Arts” show at the opening of its first Shanghai boutique in December 2009.