Business

Tuesday June 16, 2009

Multi Sports to raise RM58mil from IPO

By LEE KIAN SEONG


Jinjang: Sports shoe sole designer, developer and manufacturer Multi Sports Holdings Ltd, en route to a listing on the Bursa Malaysia main board next month, is expected to raise total gross proceeds of RM57.6mil, mainly for business expansion plans.

This is the second China-based company to announce its listing on Bursa Malaysia through initial public offering (IPO).

Executive chairman and chief executive officer Lin Huo Zhi said the company planned to spend RM30mil of the proceeds to set up a new plant in Jinjiang, which is in the Quanzhou Municipality in Fujian Province, China.

“The RM30mil will cater to the cost of building construction and purchase of machinery. We plan to purchase additional shoe moulds for our new production and we may finance it through our internally-generated funds,” he told a press conference during a media visit to Jinjiang.

Of the balance, Lin said RM5mil would be for the expansion of the sales and marketing network in China, RM3mil for advertising and branding, RM4mil for enhancement of product development capabilities, RM8.6mil for working capital and RM7mil to defray the listing expenses.

He said construction work was expected to commence in the fourth quarter this year and production should start by the third or fourth quarter next year.

“The new plant will increase production by 50 million pairs of shoe soles when it reaches full capacity, adding to our current capacity of 24 million pairs per annum,” he said.

He pointed out that Jinjiang was currently China’s sports shoe manufacturing centre, accounting for about 20% of the total sports shoe production in the world.

Multi Sports is a vertically integrated company which possesses the ability to process raw materials, manufacture components required in shoe sole production, development and designing of in-house shoe soles.

It registered a net profit of RM46.8mil in the financial year ended Dec 31, 2008 on revenue of RM195.78mil.

Its net profit and revenue grew at a compounded annual growth rate of 37.8% and 34% respectively over the last three years.

It currently has about 1,900 employees and serves about 300 customers, including Guohui, 361° and Xdlong, the manufacturers of well-known China brands.

The company plans to launch its prospectus in the first half of July and be listed on Bursa at end-July or early August.

It proposed an IPO of up to 108.6 million ordinary shares of 5 US cents each. It has set a dividend payout policy of at least 20% of its pre-tax profit per year.

AmInvestment Bank is the advisor, sole underwriter and sole placement agent for the company’s listing.


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