KUALA LUMPUR, July 10 — China’s fifth largest outdoor sportswear manufacturer, Xingquan International Sports Holdings Ltd, opened at a 12-sen premium of RM1.83 per share today, on its debut on the Main Board of Bursa Malaysia.
Xinguan’s is the first direct listing of a foreign company on Bursa Malaysia and was the most active counter with 38,204 lots changing hands at the opening bell.
Its initial public offering (IPO) for institutional investors was RM1.80 while the offer price for retail investors was RM1.71 per share.
Xingquan shares closed seven sen higher at RM1.78, after trading as high as RM1.91. As the most active counter, it saw a total of 528,673 lots traded.
“We are very pleased with the IPO performance today. We saw that Malaysian investors are very supportive of the company,” Xingquan chief executive officer and executive chairman, Wu Qingquan told reporters after the listing ceremony, here today.
He said the company, with 1,600 point-of-sales (outlets) covering 20 provinces in China, planned to expand its operations there as well as overseas.
“At the moment, we want to focus on the Chinese market and have about 5,000 point-of-sales.
“But we also have plans to venture outside China and Malaysia is one of the places,” he said. He however declined to disclose any timeframe for setting up operations in Malaysia.
Xingquan expects to raise RM165 million from the IPO, of which 34 per cent would be utilised for the company’s expansion, including building a new factory costing RM132 million.
Upon completion of the new factory by 2011, the production capacity for shoes and shoe soles would increase in stages, from approximately 5.9 million and 14 million pairs per annum to approximately 10 million and 28 million pairs respectively.
The proceeds would also be used for expanding Xingquan’s sales and distribution network, marketing and advertising activities, expanding research and development capabilities to develop new sports and leisure shoes, shoe soles,apparels and accessories, working capital and listing expenses.
OSK Research in its note stated that Xingquan was poised to ride on the growing middle class in China based on its competitive price positioning and quality products.
“Factoring in the higher production capacity in 2010 and a wide distribution network going forward, we expect earnings to register a compounded annual growth rate of 25 per cent in financial year 2009 and financial year 2010,” it said.
The research company felt that the stock is fully valued at RM1.73, based on a weighted average of Singapore-listed Peers’ price earning of 5.4 times financial year 2010 earnings per share.
“As it is Malaysia’s first foreign IPO, there may be short term interest in the stock but in the longer term, interest may wane with more such IPOs, unless Xingquan outperforms our expectations,” OSK said.
Xingquan was established in 1995 when Wu, his wife and brother engaged in the manufacture of shoes and shoe soles for local and international manufacturers.
The company brand, ADDNICE, commands a seven percent share of China’s outdoor sportswear market. It has a point-of-sales that is triple that of its competitors.
In its efforts to promote ADDNICE, the company signed up WNBA player Miao Lijie and NBA players Jason Kapono and JR Smith. – Bernama
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