China Nepstar IPO Investors Get Their Drug Fix

Nov.12.07 | About: China Nepstar (NPD)

Going into this week, China Nepstar (NYSE: NPD) had a price range on its public offering at $11.50-$13.50.  Well, as is usual for Chinese IPOs, it was too low. Thursday, China Nepstar priced its shares at $16 and as of this writing, the stock is up 17%.

China Nepstar is the largest retail drugstore chain in China, with a network of 1,791 stores in 62 cities.  Yet, China Nepstar’s market share is only 0.5%.  But with its IPO, the company is likely to scoop up a variety of competitors.

China Nepstar has another important differentiation:  proprietary brands.  In other words, such things are a nice margin boost.

Over the past three years, the compound annual growth rate of revenues has been about 43.4%.  Last year, there was about $227.6 million in revenues.  And, as for the first half of this year, revenues came to $124.3 million.

The underwriters on the deal include:  Goldman Sachs (NYSE: GS) and Merrill Lynch (NYSE: MER).