Milan Station handbag firm surges on Hong Kong debut

Milan Station is known for sourcing its bags from Hong Kong's tai tais, or ladies who lunch

Shares in Milan Station, which sells second-hand luxury handbags, have soared on their first trading day in Hong Kong.

The sizzling debut comes after a record-breaking initial public offering this month. The share sale was 2,179 times over-subscribed.

The shares closed at HK$2.77, up 66% from their offer price of HK$1.67.

It is the latest firm seeking to tap both investor and consumer interest in the Chinese market for luxury goods.

Italian fashion house Prada and US leather goods firm Coach are also seeking to raise money in Hong Kong.

Milan Station said it had raised HK$162.9m (£13m; $21m) and would use the money to fund expansion in mainland China, where it plans to open 24 new stores in the next two years.

"It plays into the current market theme - people are looking at the purchasing power of the Chinese. But it's hard to know if this rate of increase is justified," said Ben Kwong, chief operating officer of KGI Asia.

However, analysts have expressed concern at the unauthorised use of its name by shops in Shanghai, Hangzhou and Guangzhou. They also fear the company will suffer from high rents in Hong Kong.

Milan Station sources its handbags from the public, especially Hong Kong's tai tais, or ladies who lunch, who sell bags they no longer want.

Milan Station's hot share sale beat the record set by Tianjin Port Development in 2006, which was 1,702 times over subscribed.