Tibet 5100 looks to list on Hong Kong market and challenge Europeans

BEIJING - Tibet 5100 Water Resources Holdings Ltd, the Chinese provider of premium bottled mineral water, began looking to raise up to HK$1.6 billion ($205.3 million) in an initial public offering on Monday.

A total of 459.29 million new shares will be sold in a price range of HK$2.62 to HK$3.50 between Monday and Thursday, and the company plans to list on the Hong Kong Stock Exchange on June 30, the Lhasa-based enterprise said in a statement.

JP Morgan Chase & Co, CCB International (Holdings) Ltd, ICBC International Holdings Ltd and CITIC Securities Co are managing the offering, according to the company.

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Fu Lin, the chief executive officer of Tibet 5100, said on Sunday that Chinese demand for premium bottled mineral water has been growing rapidly, significantly outpacing the mass-market segment.

"The company will continue to take full advantage of government initiatives that encourage investment across western China, and capitalize on the rapidly growing premium bottled water sector," said Fu.

Analysts said the IPO will help the company to better challenge the foreign domination of the market segment, which has great potential.

"The country's premium drinking water market will expand at an annual rate of 80 percent during the next five years," said Xiao Ming- chao, vice-general manager of Sinomonitor International Co Ltd, a Beijing-based market research company.

"Annual sales of premium bottled water are expected to reach 10 billion yuan ($1.54 billion) by 2015," he said.

However, foreign brands, such as Evian and Perrier, which have been in the Chinese market for more than 20 years, still dominate the premium market at present, said Xiao.

"Tibet 5100's IPO is part of its plan to achieve better long-term growth and it will help the company to grab more market share from foreign competitors," said Huang Wei, the chief food and beverage analyst at CITIC Securities.

With three production lines in the Tibet autonomous region, its annual production capacity is approximately 155,000 tons, according to the company.

Founded in 2005, the company mainly targets institutional purchasers, including rail operators, commercial banks, airlines and government organizations.

Since 2007, it has had a strategic partnership with the Ministry of Railways to provide free 5100 Tibet Spring Water on high-speed trains around the country.

In 2010, Tibet 5100 generated 360.5 million yuan in sales, an increase of 32.9 percent from the previous year, while net profit hit 115.2 million yuan from 47.4 million yuan in 2009.