Among the best-performing China consumer plays along with Mengniu, Huiyuan is privately-run and enjoys significant market share -- 42 percent of China's pure juice segment, compared with Mengniu's 32 percent in the liquid-milk market.

But some fund managers noted that Huiyuan's valuation, at 30 times 2007 earnings -- compared with Mengniu's 38 times price-to-earnings ratio -- assumes too much of the upside enjoyed by Mengniu, whose shares have surged 488 percent since a US$202 million listing in June 2004. "People are just too optimistic about Huiyuan," said Clive Zhang, executive director of Vision Finance Asset Management, who nonetheless applied for shares in Huiyuan, which priced its Hong Kong share sale at the top of its indicated range on Wednesday.

Huiyuan Juice shares are set to begin trading on Feb. 23.

"Huiyuan's valuation is a bit high. It's just taking advantage of the Chinese New Year rally," said Brenda Lee at Daiwa Institute of Research, referring to the traditional run-up in the shares of Hong Kong-listed Chinese companies ahead of the Lunar New Year, which is set to begin on Feb. 17.

"It would be very difficult for Huiyuan to match the performance of Mengniu, which was priced at just 19 times P/E," she added.

Huiyuan's offering attracted massive orders as investors crave a swig of Chinese consumption growth. The institutional order book was over 100 times filled, while retail investors applied for roughly 900 times the shares on offer to them, a source familiar with the deal said.

Research firm Euromonitor projects China's fruit and vegetable juice sales to grow 10.6 percent a year to 67 billion yuan ($8.64 billion) in 2010, up from 40.5 billion yuan in 2005. But unlike Mengniu and Taiwan-managed Tingyi (Cayman Islands) Holdings Corp. , which generate more than enough cash to cover working capital because of their strong brands and sales networks, Huiyuan still needs to set aside working capital.

As a result, its return on capital was 13.3 percent in 2006, about half of Mengniu's 24.6 percent, its IPO prospectus said.

"I still prefer Mengniu, which has established a solid track record," said Liu Yang, managing director of Atlantis Investment Management.

While the difficulty in sourcing a consistent supply of raw milk has shielded Mengniu from competition with foreign giants, Huiyuan faces challenges from Tingyi, Uni-president, Coca-Cola Co. and local player Wahaha, which has partnerships with France's Danone.

"Huiyuan is still a small company, and people are pricing in too many positive assumptions," said Daiwa's Lee.

Huiyuan's 2005 revenue of 1.4 billion yuan was one-tenth Mengniu's 10.8 billion yuan and Tingyi's US$1.8 billion.

Tingyi, which also makes tea and is China's No. 2 pure juice maker under the Wei Chuan brand, blamed higher costs of sugar and fruit juice concentrate for squeezing juice margins last year.

Orange juice futures have jumped 10 percent since the start of the year as the U.S. Agriculture Department (USDA) expects citrus harvests in Florida to be sharply reduced due to hurricanes and disease that have struck groves.

Huiyuan sources most of its oranges from Florida and Brazil.

Huiyuan acknowledged in its prospectus that its market share comes at a price. Despite rising raw material prices, average sales prices for Huiyuan have been almost flat in the past two years since Chinese consumers are price-sensitive.

"I am more willing to pay for milk than for juices. Milk is a nutritious food, while juices are just drinks," said Shanghai-resident Anthony Lai, who only started buying Huiyuan's products recently because of a supermarket promotion -- 21.5 yuan (US$2.76) for three packs of 1.2 litres of pure juice.

That compares with Tingyi's 13.5 yuan for one pack, he said.

The soft drinks industry in China is fragmented, with sales of pure juices and nectars, defined as drinks with juice content of between 25 and 99 percent, accounting for 12.6 percent of the total, or 20 billion yuan in 2005. Chinese juice drinks consumption, at 3.4 litres per capita in 2005, lags Taiwan's 13.3 litres and Hong Kong's 16.4 litres, Euromonitor data shows.