FAST NEWS: Cirrus Aircraft falls flat in Hong Kong trading debut

The Latest:

Aircraft maker Cirrus Aircraft Ltd. (2057.HK) opened at HK$27.50 in its Friday trading debut, unchanged from its IPO price, giving the company a market capitalization of about HK$10.07 billion ($1.39 billion).

Looking Up:

The China-owned, U.S.-based aircraft maker raised HK$1.39 billion, which it will use mainly for product development, and to improve its production efficiency and capacity, and support its sales efforts.

Take Note:

 The local portion of the company’s public offering in Hong Kong was only 56% and priced at HK$27.50, near the lower end of its IPO price range.

Digging Deeper:

China Aviation Industry General Aircraft, which is 70% owned by Aviation Industry Corp. Group of China (AVIC), took over Cirrus Aircraft in 2011 from its founder, the Klapmeier brothers, and the company has been growing rapidly ever since. Its revenue and profits grew at compound annual growth rates of 20.3% and 12.2%, respectively, over the past three years. The company first applied to list in Hong Kong as early as last year, but never got off the ground due to weak demand. It applied a second time in March this year, and is now Hong Kong’s first aircraft manufacturing stock.

Market Reaction:

Cirrus Aircraft shares were largely unchanged in Wednesday morning trade and closed at HK$27.45 at the midday break, 0.2% lower than their IPO price.