Do stationery firms have 'write stuff' for IPOs?

People visit the M&G stand at the China Stationery Fair in Shanghai, Sept 25, 2013.[Photo/IC]

Two private-sector stationery companies have announced plans for initial public offerings on the Shanghai Stock Exchange, a move that comes as many players in the industry seek to expand in a highly competitive market.

Shanghai M&G Stationery Inc will offer up to 100 million shares to raise 1.48 billion yuan ($237 million), according to its prospectus released in late April.

The Shanghai-based company said it will use the proceeds to expand its dealer and distribution channels, as well as on research and development, manufacturing operations and as a boost to working capital.

In 2013, M&G, which claims to be China's largest writing supply producer with about 60,000 outlets across the country, generated 2.4 billion yuan in revenue, up 24 percent over the previous year.

The company declined further comment, but it has said it will pursue more aggressive expansion this year if its IPO plan is approved.

Rival TrueColor Stationery Co Ltd, meanwhile, plans to issue up to 55 million shares to raise about 406 million yuan.

But analysts said it might not be a good time for stationery companies to list, because a price war is eroding profit margins.

TrueColor's revenue was only half as large as that of M&G in 2013. It said in its prospectus that net profit slid nearly 27 percent from 2011 to 2013, to 3.6 million yuan, amid fierce competition.