Date
22 September 2017

Milan Station draws speculators with new theme

If it succeeds in finding a buyer soon, designer bag retailer Milan Station (01150.HK) would have the distinction — dubious, many would argue — of taking just around three years to complete the entire chain of listing the firm as a promising operation to selling it as a shell to wring out its residual value.

Perfectly timed to catch the China consumer theme running at full steam three years ago, the small-sized company’s initial public offering was a smash hit.

Shares were heavily oversubscribed and surged more than 75 percent within the first week of listing in May 2011. But things were never the same after that, and the counter began a prolonged downhill march.

Disappointing earnings stoked valuation concerns, with a price-earnings multiple of 30 seen undeserving and prompting investors to head for the exits.

In 2012, the firm sank into the red. In December last year, the firm also warned of a significant loss for 2013. The rosy prospects the company had flagged earlier for its business never materialized.

Meanwhile, several senior executives left the firm one after the other, making Milan Station’s future look anything but sound.

In February this year the company confirmed that it is in discussions for a sale of its operations. The news fueled talk that it is most likely to be acquired by an investor in search of a backdoor listing vehicle for other businesses.

With the takeover theme in play, Milan Station is stoking fresh speculative interest, in an entirely different fashion.

– Contact the writer at [email protected]

RC

 

EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe