The Straits Times / The Business Times News on AsiaPharm

3 firms proceed with share offers amid Sars fears

Two China firms and local logistics group are headed for the mainboard

By Teh Shi Ning - Apr 28, 2004
The Business Times

RENEWED Sars fears may have spooked the stock market, but that hasn't stopped three companies from going ahead with initial public offers today.

Two of the three - Jishan Holdings and AsiaPharm Group - are China plays.

The third company, RichLand Group, is a logistics service provider based in Singapore. All three will be listed on the mainboard of the Singapore Exchange.

Jishan Holdings, a Zhejiang-based company that prints and dyes fabric, is offering 90.6 million shares - comprising 81.5 million new shares and 9.1 million vendor shares - at 28 cents apiece.

This represents a price earnings ratio of 8.46 times based on net profit in FY2002. There are 13.8 million public offer shares and 76.8 million placement shares, of which one million are Internet placement shares.

Jishan, in which Singapore's Ban Joo will have a stake of around 8 per cent after the offer, expects to raise $20.6 million (100.5 million renminbi) in net proceeds. It intends to use 50 million renminbi to expand its production capacity and sales network, and 4.6 million renminbi for research and development.

The other Chinese IPO is that of AsiaPharm Group, a Shangdong-based company that produces and sells natural and pharmaceutical drugs, including its in-house developed Maitongna for use in neurology and orthopaedic medicine.

AsiaPharm is offering 105 million shares at 28 cents each. Of these, 85 million are new shares and 20 million are vendor shares. Ten million shares will be sold by public offer and the remainder by placement.

AsiaPharm intends to use $16.5 million of its expected net proceeds of $21.4 million to expand R&D and production capabilities and its distribution network.

Some $2.1 million will be used to repay bank loans and the rest is for working capital. Last year, AsiaPharm's net profit rose 283 per cent from $2.3 million to $8.8 million.

Jishan, whose net profit for the nine months ended Sept 30, 2003 was S$6.1 million, said that as at March, it had confirmed orders equivalent to one third of its revenue in FY2002.

The two companies are optimistic about growth prospects. Jishan expects to benefit from China's booming textile industry, especially with the lifting of quotas on textile exports in 2005.

Similarly, AsiaPharm said it will ride on an expected annual rise of 10 per cent in worldwide demand for natural drugs, its core business, and the rapidly growing demand for pharmaceutical drugs in China.

The two companies cited the quicker listing process, good corporate governance and familiarity with business here as reasons for choosing to list on the local bourse.

Singapore-based RichLand Group, the third company to launch its IPO today, will offer 33 million shares at 26 cents each, 8.78 times its net earnings in FY2002. The offer of 25 million new shares and 8 million vendor shares represents 26 per cent of the company's enlarged share capital.

RichLand, which provides cargo transport, airport cargo handling and supply-chain services, is offering 4.95 million shares to the public and the remaining 28.05 million by placement, including 3.3 million shares reserved for directors, management, employees and business associates.

About $4.0 million of the $5.6 million RichLand expects to raise from its IPO will be used to finance local and regional alliances and acquisitions, $1.5 million for capital expenditure on infrastructure and equipment and the balance as working capital.

The group's net profit for the nine months ended Sept 30, 2003 was $2.4 million, up 4.5 per cent from the same period in 2002.

The offer of shares for all three companies opens at 9am today and expires at noon on May 3, May 4 and May 6 for AsiaPharm, RichLand and Jishan respectively.