HONG KONG: The rebound in the Hong Kong share market has renewed hopes among capital-hungry Chinese companies seeking to list in Hong Kong, but investors are wary after the poor trading performance of this years market newcomers.

That skepticism means that two China retailers, E-Land Fashion China Holdings and Maoye International, face challenges as they begin marketing deals this week that would be Hong Kongs first initial public offerings since March.

“If the stocks debut or postmarket performance trades below the offering price, why should I buy during the IPO? I can buy after it lists,” said Adam Tam, fund manager at Pacific Sun Investment Management in Hong Kong.

Six companies have listed in Hong Kong this year but only one, China Railway Construction, trades above its offering price.

Even shares in once-hot consumption investments, which provide exposure to surging domestic demand in China, have cooled. The snack maker Want Want China, for example, trades 3.7 percent below the offering price in its $1 billion IPO last month.

That kind of performance has meant eight Hong Kong IPOs worth a combined $7 billion have been withdrawn or postponed since the start of the year, according to Thomson Reuters data.

The Hang Seng index lost 18 percent in the first quarter of the year but has gained 9 percent in April.

“Though IPO valuations are attractive now, they are not must-buy, as upcoming listing candidates are not market leaders,” said Tam, who attended Maoyes scaled-back investor presentation on Monday.

Maoye, the department store operator, is raising as much as $420 million, less than half its earlier target, in a deal handled by Goldman Sachs, HSBC and UBS.

Maoyes IPO price range represents a price/earnings multiple of 19.7 to 25.8 times the IPO sponsors earnings forecast for 2008, compared with its P/E valuation of 29 to 37.7 when it originally began a $905 million offering in January.

By comparison, Chinas top department store, Parkson Retail Group, trades at 34.8 times 2008 prospective earnings, while Golden Eagle Retail Group trades at 27 times.

“Chinese consumption stocks are not defensive plays anymore, as some of them face price cap policies imposed by the Chinese government - they are also facing policy risk,” said Michael Chung, fund manager at Iventure Investment Management.

Beijing caps the retail prices of some goods in order to curb inflation, meaning retailers cannot pass higher costs onto customers, which squeezes margins.

Chung said he was choosing consumption-related stocks based on fundamentals instead of buying the entire sector. He also said demand for new issues would be crimped by investor reluctance to lock up funds for IPO applications if there were only prospects for low returns on their IPO shares.

Numerous Hong Kong investors have been burned after borrowing heavily to apply for shares in hot IPOs.

Last year, the Hong Kong exchange was third busiest for IPOs, after London and Shanghai.

“Investors buying IPOs closely track market sentiment,” said Antonny Cheng, managing director at Gain Asset Management.

“Last year, everyone flocked into IPOs no matter whether the company quality was weak. Now, there is no such sentiment.”

Institutional investors, meanwhile, have grown risk-averse as they manage the global credit crunch, he added.

Chinas department store sales are expected to total 682 billion yuan, or $98 billion, in 2010, an increase of 72.5 percent from 2005, or a compound annual growth rate of about 11.5 percent, Euromonitor says.

Several Chinese retail operators hope that kind of growth is enough to entice investors.

The womens apparel retailer E-Land, a unit of the South Korean E-Land World Group, plans to kick off its $369 million Hong Kong IPO roadshow on Wednesday, according to a document obtained by Reuters that details the terms of the deal. Its deal is being handled by Citigroup, Goldman Sachs and UBS.

Artini International Group, which sells fashion accessories, began premarketing for its $100 million to $200 million Hong Kong IPO on Monday and plans to start its formal roadshow on April 28. The company is scheduled to start trading on May 16.

ATLANTA: Delta Air Lines Inc., the third-largest U.S. carrier, said Wednesday its loss widened in the first quarter to a whopping $6.39 billion (\4.01 billion) because of soaring fuel prices and the steep decline in the companys market value.

Northwest Airlines, which will combine with Delta to create the worlds largest airline, reported a $4.1 billion (\2.57 billion) loss in the first quarter.

Deltas results badly missed Wall Street expectations, despite a 12 percent increase in sales.

The Atlanta-based company said the loss is equivalent to $16.15 (\10.13) a share. That compares with a loss of $130 million (\81.56 million) that Delta reported in the year-ago January-March quarter, when it was still in bankruptcy.

Excluding special items, primarily a $6.1 billion (\3.83 billion) non-cash charge relating to the decline in Deltas market value due to sustained record fuel prices, the airline lost $274 million (\171.89 million), or 69 cents a share, in the first quarter.

Analysts were expecting a Delta loss of 49 cents a share, excluding one-time items.

Revenue in the quarter rose to $4.77 billion (\2.99 billion), compared with $4.24 billion (\2.66 billion) recorded in the same period a year ago.

Delta said its first-quarter loss before special items was driven by a $585 million (\367 million) year-over-year increase in the cost of fuel.

When it exited Chapter 11 protection, Delta projected its stock would be worth $9.4 billion (\5.9 billion) to $12 billion (\7.53 billion) in all, but that was assuming the price of crude would be at $70 (\43.91) per barrel.

Gas and oil prices pushed further into record high territory Tuesday, with crude nearing $120 (\75.28) a barrel. Retail gas reached a national average of $3.51 (\2.20) a gallon for the first time. Deltas current market value is roughly $2.6 billion (\1.63 billion), based on 395.6 million shares outstanding, which include shares not yet distributed to some creditors from its bankruptcy case.

Delta announced last week that it would acquire Northwest Airlines Corp. in a stock-swap deal that, if approved by regulators and shareholders, will create worlds largest airline.

“Our need to respond to the pressures of dramatically rising fuel costs and a softening U.S. economy drove us to take a closer look at all options to protect Deltas future,” Chief Executive Richard Anderson said in a statement. “The merger with Northwest will create an airline with the size, scale and global presence to weather economic downturns and compete long-term in the global marketplace.”

The airlines are trying to sell the deal to the public, employees, federal regulators and Wall Street. So far, investors appear unconvinced.

The stock declines since the deal was announced have shaved roughly $1.3 billion (\0.82 billion) off the value of the deal to Northwest shareholders, who would get 1.25 Delta shares for every Northwest share they own.

Anderson will head the combined airline, which would be called Delta and be based in Atlanta.

The carriers have said they have no current plans to cut more U.S. flights beyond what they have disclosed separately. Analysts have said that limits the cost savings or higher fares the airlines could reap from the deal.

The companies havent ruled out further capacity cuts in the future if fuel prices continue to rise. Delta reiterated that sentiment Wednesday, saying it is continuing to evaluate the fuel and demand environment “and will make proactive changes quickly if economic conditions warrant.”

As of March 31, Delta said it had $3.6 billion (\2.26 billion) in unrestricted liquidity, including $1 billion (\0.63 billion) available under a revolving credit line.

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On the Net:

Delta Air Lines Inc.: «www.delta.com»

MILAN, Italy: Italys Prime Minister-elect Silvio Berlusconi said Wednesday he expects a group of Italian investors will be ready to present a bid for the failing Alitalia airline within three to four weeks.

But he also warned in comments on Italian radio that any bid will likely bring job cuts, given the severity of the airlines financial predicament.

The outgoing Italian government on Tuesday approved \300 million (US$478 million) in emergency funding aimed at keeping the cash-strapped airline flying and out of bankruptcy protection while a new bidder can be found after Air France-KLM withdrew its offer.

The funding Д a so-called bridge loan that would need to be repaid by the end of the year Д was twice the amount expected because of a request by Berlusconis aides.

Before the money can change hands, the measure must be approved by the EU Commission, which has not been formally notified of the funding by Italy, a commission spokesman Michele Cercone said in Brussels.

Brussels has in the past made clear that any state aid for Alitalia would be illegal, but Cercone said it was impossible to evaluate the emergency funding until the commission has been informed of the conditions.

The Alitalia board announced that it will meet Thursday to discuss the loan. The board also planned to meet separately with unions that day.

Berlusconi said now that cash had been secured to keep the airline running, a group of Italian investors being tapped by an aide would be prepared to make a bid in the coming weeks once they have performed due diligence on Alitalias books. He also warned that a restructuring plan would be painful.

“No one can guarantee that the number of workers will remain at present levels,” Berlusconi said.

He said that banks and aviation companies should be involved in Alitalias rescue, without naming them.

Intesa Sanpaolo SpA Д Italys largest bank, which had launched a failed bid with Italys No. 2 carrier Air One Д said this week that it would be interested, if the conditions were right. And Berlusconis old friend, Russian President Vladimir Putin, last week said the Russian airline Aeroflot, which had previously denied interest, would consider a possible role.

Berlusconi made his opposition to the Air France-KLM takeover one of the central themes of the electoral campaign, although he appeared to soften his opposition to the Franco-Dutch carrier after winning the April 13-14 elections.

Berlusconi, however, denied that Air France withdrew its offer due to political interference.

“Air France withdrew its offer because of the union veto,” he said.

Air France broke off talks with Alitalia over union demands on April 2, then days later said the offer was still on the table. On Monday, it issued a statement saying that the offer no longer stood.

Air France planned to cut 2,100 Alitalia jobs, close the cargo unit and, in keeping with Alitalias own business plan, strip Milans Malpensa airport of its status as an Alitalia hub, reducing flights to the airport.

Alitalia has been losing up to \1 million (US$1.6 million) a day and was expected, before the emergency aid, to run out of cash by June, in the middle of the important tourist season.

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AP Business Writer Aoife White contributed to this report from Brussels.