China Fibretech Ltd IPO Review

Close of Application 12.00 noon on 26 June 2008
Balloting of applications 27 June 2008
Commence trading 9.00 a.m. on 30 June 2008
Underwriter and placement agent Westcomb Securities Pte Ltd
Invitation shares 133,653,000 Shares
Public Offer 2 million (1.5% of overall offer)
Offer Price 21 cents

China Fibretech, based in Shishi in southern China's Fujian Province, dyes and post-processes cotton, polyester and mixed-knit fabrics. It is a pure fabric processing service provider. This is the second IPO in same sector from China after China Taisan on 6 June 2008. The next 2 coming IPOs is Qian Feng Fabric Tech and Zhongguo Pengjie Fabric.

China Taisan went IPO at 24 cents on 6 June 2008 and subsequently announced their trebled Q1 profit on 17 June 2008. However, their share price is currently trading with 8.3% discount at 22 cents today (9:38am, 24 June 2008).

In term of growth of revenue and net profit, China Fibretech is not as impressive as China Taisan. Laterally, I do not expect China Fibretech to outperform China Taisan or their market brother like Li Heng and China Sky.

I am bearish on this stock. For exposure to China fabric industry, we are spoilt with plenty of choices in the market. Get it from the open market with a discount if you must own a piece of China Fibretech. I do expect under subscription or less then 1.5 times over subscription for this counter. Therefore, please be prepared to get full allocation of the application.