PRG Holdings Bhd, a Bursa Malaysia Main Market-listed investment holding Company has today successfully listed its manufacturing subsidiary – Furniweb Holdings Limited (Listco) on the Growth Enterprise Market (GEM) board of the Hong Kong Stock Exchange (HK Exchange).
The stock has officially commenced trading under the stock code 8480.HK at the opening of trading at 9.30a.m. yesterday morning. Post listing, PRG will hold 75% stake in the enlarged share capital of Listco.
Based on the offer price of HKD0.50 per share for a total of 126 million new shares, the Listco has raised a total of HKD63 million (equivalent to approximately RM33 million).
The net proceeds, after deduction of underwriting fees and other expenses in relation to this listing exercise, which amounted to approximately HKD35.6 million (equivalent to approximately RM19.18 million) will be reinvested for the operations of Listco. A total of HKD32.4 million (equivalent to approximately RM17 million) has been allocated to expand the production capacity of the Listco’s products, namely Narrow Elastic Fabric, Covered Elastic Yarn and Seat Belt Webbing through the construction of a new factory in Vietnam and acquisition of new machines.
Speaking after the listing ceremony, PRG Group Managing Director Datuk Lua Choon Hann said: “We are very excited about today’s listing and feel that we have achieved what we set out to do — that is to list on an international platform such as the HK Stock Exchange.”
“The demand for the Listco’s shares has been overwhelming, with an oversubscription of approximately 162.6 times for the Public Offer of 12.6 million shares. We were met with great interest from investors, some of which hail from established and renowned firms. I believe the strong demand for the subscription confirms a high level of confidence in our business strategy, strength of our unique offering, and great potential of our products within the market.”
“We believe the listing of Listco on HK Stock Exchange will provide liquidity to both retail and institutional investors, leading to better price discovery for both shares of Listco and PRG. We would like to thank our investors for their confidence in the management of Listco. We are committed to growing the company and seek to continuously enhance our shareholders’ value through the expansion of production capacity,” Lua added.
Furniweb ranked No.1 in terms of market share in FY2016 amongst manufacturers of: 1) covered elastic yarn in Malaysia and Vietnam; 2) narrow elastic fabric in Vietnam; 3) furniture webbing in Malaysia and Vietnam and 4) seat belt webbing in Malaysia. It is principally engaged in the manufacturing of: 1) elastic textile, comprising covered elastic yarn and narrow elastic fabric; 2) webbing, comprising furniture webbing and seat belt webbing and 3) other products, including rubber tape.
The products manufactured are sold and exported to over 30 countries including the United States, the United Kingdom, India, Indonesia, Australia, Sri Lanka, and Pakistan. During the financial year ended 31 December 2016 (“FY2016”), the Listco registered a revenue of RM97.9 million, which was an increase of 10% from FY2015. Its net profit (before listing expenses) stood at RM9.1 million, representing a 68.5% year-on-year growth from FY2015.
As at 19 September 2017, Furniweb had five production facilities in total, with three production facilities located in Malaysia, occupying an aggregate gross floor area of 195,227.0 sq.ft., and two production facilities in Vietnam, occupying an aggregate gross floor area of 346,237 sq.ft..
Taking advantage of Vietnam’s potential and business prospects, such as the availability of labour at competitive costs and the introduction of favourable taxation environment for foreign investments, the Company is able to establish a scaled production capacity that allows the Company to serve customers of various operation scales.
Based on the industry outlook in the Prospectus registered with the HK Stock Exchange, the increasing number of downstream product manufacturers setting up production facilities in Vietnam shall continue to drive the demand for most of the Listco’s principal products in the country. According to the industry report, these principal products are expected to grow at a compounded annual growth rate (“CAGR”) of 10% or more after 2020.