Testrite Retail Co. (7867) will open its pre-listing public subscription from Oct. 16 to Oct. 20, with a tentative underwriting price of NT$48.04 per share. Based on a recent Emerging Stock Board price of NT$54, the source report estimated a potential profit of about NT$6,000 for one lot, or roughly a 12% return, for investors who win an allocation.
Testrite Retail’s business and listing plan
According to ABMedia, Testrite Retail is Taiwan’s first large-format specialty chain focused on DIY home repair tools and materials. Its core business covers hardware, tools, paint, bathroom products, kitchen products, and other home repair and furnishing items. The company also offers professional installation and home repair services.
The report said the company has long held a leading position in Taiwan’s home improvement retail market. To prepare for its initial listing, Testrite Retail has received approval from the Taiwan Stock Exchange and has formally started the pre-listing cash capital increase and public underwriting process.
How the stock lottery works
The formal name for Taiwan’s stock lottery is public subscription. It is a mechanism through which companies issue new shares to the public to raise funds. When a company conducts an IPO or a post-listing capital increase, a certain portion of the offering must be made available to public investors under the rules described in the report.
Investors submit applications through their securities broker’s trading platform and must make sure there are enough funds in the settlement account on the designated deduction date to cover the subscription payment and related fees. If the number of applications exceeds the number of available lots, the Taiwan Stock Exchange carries out a computerized random draw.
Costs and risks investors need to weigh
The report said most investors join these subscriptions to capture the gap between the underwriting price and the market price. Lead underwriters usually leave some discount in the offer price to attract demand.
That said, applicants face the cost of frozen capital. After the subscription closes, the full share payment is deducted on the payment date and remains locked for several trading days, until refunds are issued to unsuccessful applicants.
There are also direct transaction costs. Each subscription requires a NT$20 processing fee and a NT$50 mailing fee for the winning notice. If an investor does not win, the share payment and the NT$50 mailing fee are refunded, meaning NT$20 becomes the non-refundable cost.
ABMedia also noted that Testrite Retail is moving from the Emerging Stock Board to a formal listing. The current reference price comes from a market with relatively lower liquidity and sharper price swings. There is also a time gap between subscription, drawing, and the official share allotment and listing, leaving uncertainty over whether the share price can hold at the expected level once trading begins.
Subscription timetable and required funds
The report said existing shareholders have waived their priority rights to subscribe for the new shares in line with regulations and shareholder resolutions, and the full offering has been entrusted to securities underwriters for the pre-listing public underwriting process.
The cash capital increase involves 10,200 lots in total. Of that amount, 10%, or 1,020 lots, is reserved for employees. The remaining 90%, or 9,180 lots, will be handled through book building and public subscription. The book-building period runs from Oct. 13 to Oct. 15, followed by the public subscription period.
To take part, investors need to submit an application through the stock lottery section of their brokerage app before 2 p.m. during the Oct. 16 to Oct. 20 window. Before the deduction date on Oct. 21, they must have NT$48,110 in their settlement account. That total, based on the tentative underwriting price of NT$48.04, includes NT$48,040 for the shares and NT$70 for fees and mailing charges. The capital increase record date is scheduled for Oct. 27.