Malaysia can expect to see more foreign initial public offerings, particularly if the equities market remain buoyant, said CIMB group deputy chief executive officer, corporate and investment banking, Datuk Charon Wardini Mokhzani.
“China is home to many good companies with good growth. Obviously we will be looking for more such companies from China,” he said during an exclusive interview with StarBiz before the prospectus launch of China-based Xingquan International Sports Holdings Ltd, which will be the first direct listing of a foreign company on Bursa Malaysia.
“With this listing, there is scope for Malaysia to feature international companies, hence also attracting international investors,” Charon said, adding that the Securities Commission (SC) and Bursa Malaysia have been working together to promote foreign listings.
The SC approved Xingquan’s listing process in one month.
The CIMB group had previously listed nine Chinese companies in Singapore, according to Charon.
Xingquan’s IPO consists of a public issue of up to 99.5 million new ordinary shares of which 9.5 million shares are being offered to the Malaysian public in the retail offer.
The final retail price will be below RM2.10 per share or a 5 percent discount to the institutional price, which will be determined later.
Xingquan will tentatively be listed on July 10 with the IPO exercise expected to raise up to RM208.9mil.
CIMB Investment Bank is the adviser, underwriter, placement agent and sole bookrunner for the IPO exercise.
Meanwhile, Xingquan, which has an estimated paid-up capital of RM115mil, is mainly in the business of sports and leisurewear in China and presently sells its products under the Addnice brand.
It also provides shoe soles for international brands such as Fila, Prince and Spalding.
Xingquan’s executive chair and chief executive officer Wu Qingquan said the SC and Bursa Malaysia had been very accommodating and had rolled out the red carpet for them.
“Xingquan is presently the top outdoor sports player in China. As we carry our own brand and also manufacture shoe soles, this enables us to command higher margins. We use the same technology as adidas and Nike,” Wu said.
For its first half ended June 30, 2009, Xingquan recorded a net profit of RM45.63mil on the back of RM206.23mil in revenue.
For FY08, it recorded net profit of RM65.76mil and revenue of RM323.56mil.
From June 2006 to June 2008, the company has been growing at a compounded annual rate of 48 percent.
It presently has 1,400 points of sale in 20 provinces in China.
This year, Wu plans to increase its points of sale by 30 percent.
About 80 percent of its revenue is derived from outdoor and general sports products.
The remaining 20 percent is derived from shoe sales to third party manufacturers.
Wu said part of the funds raised from the IPO would be use to build a new factory with 55,000 sq m of production space in China.
“We will use about 40 percent of the fund from the IPO for the new factory.
“Currently, our manufacturing hub is at Quanzhou, Fujian Province with 48,000 sq m of production facility, able to produce up to 5.9 million pairs of shoes per annum and 14 million pairs of shoe soles per annum,” he said at the launch of the Xingquan prospectus.
He added that the rest of the fund would be used for marketing and advertising activities, expansion of sales and distribution network, research and development, working capital and listing expenses.
Wu said that although the company was currently focusing on the China market, Malaysia would be the first country for the company’s future business expansion.