Carpenter Tan Holdings Ltd, China's leading wood-comb manufacturer, is crafting an initial public offering (IPO) in Hong Kong with hopes to list on the stock exchange.

"We have hired a new accounting firm and our colleagues are working tirelessly on the offering," Carpenter Tan's Hong Kong Operations Manager Raymond Law told China Daily. "We hope to float shares in Hong Kong soon."

No definite timetable was given.

Chinese calligraphy at a Carpenter Tan outlet roughly translates to "I am a carpentry master". The wood-comb maker is planning to float shares soon. Lilian Liu

Back in 2006, Carpenter Tan was reportedly planning a HK$50 million IPO, but it was postponed for "technical problems".

But with the comb maker again planning to launch its IPO, analysts are asking: "Why now?"

With the stock market being as volatile as it's been, and the correction not expected to be over, some market analysts don't believe it's a good time to list.

"I don't think investors will show interest in Carpenter Tan's IPO if it sells shares when the market sentiment is as negative as it is now. It is just not a good time," said Linus Yip, a strategist at First Shanghai Securities.

"Investors are unlike they were before," Yip said. "They used to cash in on any IPO shares, even if they didn't know what the company did."

Born into a carpenter family in a remote Sichuan village, and after losing his right hand in an accident at the age of 18, Carpenter Tan CEO Tan Chuanhua founded the comb company 13 years ago, starting with a shabby store and selling combs at 2 yuan each.

Today, the company has been transformed into a stylish chain with Carpenter Tan becoming a household brand name on the mainland. It has over 700 stores across the country and recorded net profits of 41 million yuan in 2007, a 36 percent year-on-year jump from 2006's 30 million yuan.

The comb maker is targeting 50 million yuan in profits this year, according to Law.

It sells combs for between HK$60 and more than HK$1,000 each in Hong Kong, and from 30 yuan to several hundred yuan on the mainland.

Overseas expansion

With Hong Kong as an ideal springboard to tap into the international market, Carpenter Tan plans to operate 10 stores in Hong Kong. The first two stores were opened in Central last summer.

"Our management believes Hong Kong is the most preferred city for overseas expansion. It can serve as a window to the world, which is ideal for Carpenter Tan to promote its products to the rest of the world," Law said.

The company also has a couple of department-store counters in Taiwan Province, and it is planning to open stores in Singapore.

Law said the growing cost won't have too much of an impact on the company's growth.

"We located our manufacturing base in Wanzhou - a town about 400 km away from Chongqing - where business costs are relatively low," Law said.

(HK Edition 03/12/2008 page3)