Business

Friday August 14, 2009

Xidelang to raise RM100mil from IPO

By LEONG HUNG YEE


It plans to use proceeds for advertising and promotion activities

KUALA LUMPUR: Xidelang Holdings Ltd, en route for listing on the Main Market of Bursa Malaysia soon, is upbeat on its growth prospects, given its track record and rising affluence of Chinese consumers.

Managing director Ding Peng Peng said China was expected to be the world’s largest market for sporting goods in 2010.

“On average, China’s per capita gross domestic product growth is 9.9% per annum. China is expected to increase its per capita footwear consumption to 2.3 pairs per annum by 2012,” he told a briefing yesterday.

The company, which has received approval from the Securities Commission to list on the Main Market, produces and markets its sports apparel and goods as well as shoes under the brand XiDeLang. It has about 1.6% share within China’s sportswear market this year.

Ding Peng Peng poses with some of the sports apparel and shoes produced by the company

Xidelang, which will be launching its prospectus next month, expects to raise more than RM100mil from its initial public offering exercise.

Ding said the bulk of the proceeds raised would be used mainly for advertising and promotion of its brand.

To a question, he said the company’s focus at the moment was to strengthen its distribution network before further improving on its net profit margin.

Its net profit margin for financial year ended Dec 31, 2008 (FY08) improved to 17.2% from 16.4% in FY07. Despite a relatively flat improvement, Ding said the company was confident of improving it further.

“We are a young company and still at a growing stage. It will not be a problem to grow. However, we need to build our distribution network and advertising and marketing to strengthen the brand name,” he said, adding that there was no point advertising if consumers could not find any of its products in a certain location.

Ding said the company’s immediate plan was to open more retail outlets in north-east China in the Heilongjiang Liaoning and Jilin provinces. Xidelang currently has about 2,320 retail network across 24 provinces in China.

The company chalked up a 66.1% compounded annual growth rate in revenue and 95.6% in net profit over the past three years.

In FY08, the company recorded a net profit of RM47.4mil on revenue of RM275.4mil. Last year, the company sold about 6.1 million pairs of sports shoes and 3.6 million sports apparel, accessories and equipment.

The shoes division contributed RM184.5mil, or 67%, of its total revenue last year. Ding expects higher contribution from its apparel segment to overall revenue.

“In fact in 2009, we should already see apparel contributing close to 40% to total group revenue and more in future,” he said.

He said the company produced 4.4 million pairs of shoes last year and outsourced some of its sports shoes. The company would be ramping up its production to about 10 million pairs per annum.

Apart from doubling its shoes production, Xidelang is also looking at the possibility of setting up concept stores.


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