7 Days Debuts On NYSE - Stocks To Watch
11/20/2009 9:01:30 AM(RTTNews) 7 Days Group Holdings Ltd. (SVN), an economy hotel chain based in China, debuts on the New York Stock Exchange under the symbol "SVN", today - the 20th of November.
The company said it priced its initial public offering of 10.1 million American Depositary Shares or ADS at $11 per ADS, at the high-end of its expected price range of $9-$11, to raise gross proceeds of $111.1 million. Each ADS represents three ordinary shares.
The budget hotel chain, which targets customers who cannot afford expensive hotels, may be well-positioned to benefit from the upcoming Shanghai Disneyland and the 2010 World Expo in Shanghai, which are expected to boost demand for hotel rooms.
From a humble beginning of 5 hotels in 2 cities as of the end of 2005, 7 Days has grown at an incredible clip to 283 hotels in 41 cities as of September 30, 2009.
The Hotel chain aims to provide limited service for inexpensive room rates. For the nine months ended September 30, 2009, the average hotel room rates in Beijing were 188.83 Yuan or $27.66 and 132.53 Yuan or $19.41 in Jinan.
Revenues have increased multi-fold from 14 million Yuan in 2005 to 721.4 million Yuan or $105.7 million in 2008 and to 830.8 million Yuan or $121.7 million in the first nine months of 2009.
In its IPO prospectus, the company said its average occupancy rates were 88.1% in 2008 and 88.4% for the first nine months of this year.
On the flip side, 7 Days Group has been struggling to make a profit. The company had a net loss of $30.8 million in 2008 and $1.4 million for the first nine months of this year.
All the American Depositary Shares sold in this offering were sold by 7 Days Group. The group has granted the underwriters a 30-day option to purchase up to an additional 1.515 million ADSs to cover over-allotments, if any.
The Company plans to apply the net proceeds from this offering to repay debt, to fund working capital and for other general corporate purposes, which may include the expansion of its hotel chain and the improvement of existing leased-and-operated hotels.
The company's major competitor is Nasdaq-listed Home Inns and Hotels (HMIN) which operates 547 hotels in 107 different cities across China. HMIN closed Thursday's trade at $35.48.
by RTT Staff Writer
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