Chemical maker Befar Group slumps in Hong Kong debut

Shares of chemical products maker Befar Group Co. Ltd. (6745.HK; 601678.SH) opened 21.26% lower in their Hong Kong trading debut on Friday, then fell from there to close at HK$3.05 by the midday break, down 12.36%.

Befar offered 352.1 million Hong Kong-listed H-shares at HK$3.48 per share, raising net proceeds of about HK$1.16 billion ($148 million). The Hong Kong public offering for local investors was oversubscribed by more than 200 times, while the international offering was oversubscribed by 3.26 times. Seven cornerstone investors purchased shares, including China Hongqiao, Tianto, Hyperion Venture, Safewell, and arrangements involving Beijing Yian, Luhua Daosheng and Aurora SF.

Founded in 1968, Befar produces and sells chlor-alkali chemicals, C3 and C4 chemicals, and wet electronic chemicals. Its core products include caustic soda, propylene oxide, MTBE and electronic-grade hydrofluoric acid. Befar said it expects its first-half net profit to reach 344 million yuan ($50.6 million), up 208.25% year-on-year, driven by a low base last year, higher prices for key products and higher sales after its C3 and C4 production base came onstream.

Befar said it will use about 40% of the IPO proceeds for its source-grid-load-storage project in the Binzhou Beihai Economic Development Zone, 30% to enhance R&D capabilities, 10% to build electronic chemicals production facilities, 10% to expand its overseas sales and service networks, and the remaining 10% for working capital and general corporate purposes.

By Lee Shih Ta

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