Hengan, based in China's Fujian province, makes and distributes products such as sanitary napkins and disposable baby diapers on the mainland. It has 136 sales offices in China.

``Investors are likely to buy on the company's strong growth potential in the huge China market where the products' penetration rates are still low,'' said research manager Alex Wong at OSK Asia Securities.

Hengan said in its listing prospectus that about 40 per cent of potential consumers bought sanitary napkins in 1997, while the rate for diapers was as low as about 0.40 per cent.

The company issued 250 million new shares at HK $2.80 per share in an initial public offering (IPO) in late November.

About 90 per cent of the issue was allocated for international placement and the remainder was for public subscription in HongKong. Hengan said its Hong Kong public offering of 25 million new shares was 35.5 times oversubscribed.

``The subscription response was better than I expected,'' said head of research Vivian Kwok of Sassoon Securities.

Analysts said Hengan's products were a basic necessity for many people in China and that gave the company a much stronger earnings outlook.

``The response indicates improved market sentiment on IPOs, especially those with good fundamentals,'' said research manager Kinson Au at Asia Financial Securities.

``Strong IPO response also gives people confidence that the shares will perform well,'' Au said.

Analysts said this was confirmed by the high grey market price of about HK $3.20 per share.

With the exception of Luen Cheong Tai International Holdings Ltd new listings performed well last week and this would aid sentiment towards Hengan, Wong said.

Shares of MAE Holdings Ltd ended their trading debut at HK $1.24, above their issue price of HK $1.13 each. Good Fellow Group Ltd alsoclosed its first day of trading at HK $1.03, above the issue price of HK $1.But Luen Cheong Tai International ended its debut at HK $0.75, below the issue price of HK $1. Analysts said Hengan shares would perform in line with the overall stock market, and sentiment would be boosted by Hong Kong banks' decision on Friday to cut deposit saving rates.