public offering

On July 7, 2010, Agricultural Bank of China (AgBank) priced its first public share issue. The bank, which operates nearly 24,000 branches, will sell 25 billion shares on the Hong Kong Stock Exchange for HK$3.20 ($0.41 U.S.), and 22 billion shares on the Shanghai exchange for 2.68 yuan ($0.40 U.S.). Strong investor interest in China, whose economy grew 11.9% in the first quarter of 2010 compared to a year earlier, should help AgBank’s initial public offering (IPO) raise $22.1 billion U.S. That would make it the largest IPO in world stock market history, topping Industrial & Commercial Bank of China, which raised $21.6 billion U.S. in 2006. AgBank is the latest in a series of big world stock market IPOs from Asian and emerging markets this year. The world’s 10 biggest IPOs in 2010 include firms from China, Russia, Poland and India. The U.S. is noticeably absent from the list, and only one western European firm (from Spain) was included....

Consumer confidence is rising in the U.S., but the recovery remains fragile. To cut your risk, we look for consumer companies with well-known brands, like these three clothing retailers. Their strong brands should help them keep increasing sales, both in the U.S. and overseas. But only two are buys right now. LIMITED BRANDS INC. $24 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 323.4 million; Market cap: $7.8 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.5%; WSSF Rating: Average) operates two main retail chains: Victoria’s Secret (lingerie) and Bath & Body Works (soaps and bath oils). It also operates the La Senza lingerie chain in Canada and 30 other countries. Limited has introduced new products that are lifting its sales and increasing customer visits. As well, its Victoria’s Secret chain has introduced several low-priced items to attract cost-conscious shoppers....

TIM HORTONS INC. $31 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 180.7 million; Market cap: $5.6 billion; Price-to-sales ratio: 2.5; SI Rating: Average) is one of Canada’s largest fast-food restaurant chains. Its 2,971 outlets mainly serve coffee and donuts. It also has 556 stores in the U.S., mostly near the Canadian border. Franchisees own 99% of the company’s outlets. Tim Hortons was a wholly owned subsidiary of U.S.-based Wendy’s International Inc. (now part of Wendy’s/Arby’s Group Inc., New York symbol WEN) until March 2006. That’s when it completed an initial public offering of common shares at $27.00 each. In September 2006, Wendy’s handed out its remaining 82.75% stake to its own shareholders as a special dividend.

Lower taxes lure Tim’s north

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TECK RESOURCES LTD., $19.99, Toronto symbol TCK.B, will sell 101.3 million class B subordinate-voting shares (one vote per share) at $17.21 each to China Investment Corp., a sovereign wealth fund controlled by the Chinese government. Teck is selling these shares for 13.9% below the current market price. That’s because China Investment agreed to certain conditions, including holding onto these shares for at least a year and not selling them to one of Teck’s main rivals or customers. Despite the discount, Teck’s shares rose 8% on the news. That’s because Teck will put the $1.7 billion proceeds from the sale toward the $9.8-billion U.S. it borrowed to finance its $13.6-billion (Canadian) purchase of Fording Canadian Coal Trust last October....

DOREL INDUSTRIES, $26.79, symbol DII.B on Toronto, has introduced its patented Air Protect system to protect children in car seats during side-impact collisions. The system works by putting a layer of air protection around the child’s head. Air Protect inflates a cushion which then slowly loses air to absorb the energy that can cause head trauma. It will be launched as part of the company’s new Safety 1st Complete Air Car Seat. Head trauma causes the vast majority of fatalities in side-impact crashes, according to the U.S. National Highway Traffic Safety Administration. Dorel believes that it will sell hundreds of thousands of the Air Protect car seats, whose technology will eventually be added to other seat designs, including lower-cost options. As well, the U.S. government is looking at requiring safer car seats in order to protect infants from side-impact crashes....

TERANET INCOME FUND $9.50 (Toronto symbol TF.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 155.0 million; Market cap: $1.5 billion; SI Rating: Speculative) manages Ontario’s electronic land registration system. Over 80,000 customers use its proprietary, software application, Teraview, to conduct electronic real estate registrations as well as title and writ searches. Teranet has an exclusive license from the Ontario government to operate the land registry system until March 31, 2017. Teranet’s units began trading on June 16, 2006 after the fund completed an initial public offering at $10.00 a unit. The fund pays distributions of $0.065 a month. The annual rate of $0.78 yields 8.2%. Teranet distributed 70% of its cash flow to unitholders in 2007....

NEWMONT MINING $49.42 (New York symbol NEM; SI Rating: Average) is one of the largest gold producers in the world with major operations in the United States, Canada, Peru, Australia, Indonesia and Ghana. Newmont expects to produce over 6.3 million ounces of gold this year. Newmont’s Canadian subsidiary Franco-Nevada Corp. has sold 82 million shares to the public. Franco-Nevada will use the $1.3 billion proceeds from the initial public offering to purchase 190 base and precious metals mining royalty interests plus 100 oil and gas royalty properties from Newmont. This will give Newmont $1.3 billion in cash to pay for its recent $1.5 billion purchase of TSX-listed Miramar Mining. It will also let it focus on its core gold mining business....

LA-Z-BOY INC. $6.00 (New York symbol LZB; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 51.4 million; Market cap: $308.4 million; WSSF Rating: Average) has struggled lately as the slump in the housing market has cut demand for new furniture. In its second fiscal quarter ended October 27, 2007, the company lost $0.07 a share from continuing operations, due to $0.08 a share in one-time charges. It earned $0.06 a share in the year-earlier quarter. Sales fell 11.9%, to $365.4 million from $414.6 million. Meanwhile, La-Z-Boy is doing a good job controlling its inventory. That puts it in a good position to profit when sales rebound. A cut to the $0.48 dividend, which yields 8.0%, is a possibility. But the stock would still yield 4.0% even after a 50% reduction. La-Z-Boy is a buy for patient investors....

APPLE INC. $184.70, Nasdaq symbol AAPL, earned $3.93 a share in its fiscal year ended September 29, 2007, up 73.1% from $2.27 in the prior year. The gains came from strong demand for Apple’s new iPod music players, iPhone and Mac computers. Revenue rose 24.4%, to $24.0 billion from $19.3 billion. Apple is debt free, and has $15.4 billion ($17.64 a share) in cash. It spends roughly 12% of its revenue of $27 a share on research. Apple’s strong reputation for design and convenience, as well as its loyal customer base, should continue to spur growth. However, at 40.7 times its fiscal 2008 profit forecast of $4.54 a share, the stock is vulnerable to a big drop if the company fails to meet its revenue and earnings targets. Apple is still a hold for aggressive investors....

APPLE INC. $131.77, Nasdaq symbol AAPL, aims to solidify its 70% share of the digital music player market with its new line of iPods, including a version that can wirelessly connect to the Internet. A new alliance with the Starbucks coffee chain will also make it easier for iPod users to wirelessly download music from Apple’s iTunes music store. However, the stock fell 10% on news Apple is cutting the price of its iPhone by a third. The company will soothe the feelings of customers who bought an iPhone prior to the price cut by giving them a $100 credit toward future purchases. Investors took the price cut as a sign that iPhone demand is already weakening, just two months after its heavily hyped launch. But Apple may hope to make up the lost revenue in bigger iPhone sales volumes, particularly in the Christmas selling season, and possibly from the benefit of introducing Apple products to a larger segment of the public....