China-based company Leader Environmental Technologies Ltd has launched its initial public offering (IPO) for a Singapore Exchange mainboard listing.
The group is a one-stop environmental protection solutions provider for industrial waste gas and wastewater emissions.
The offering, which opens today, consists of 116.5 million shares - 91 million new shares and 25.5 million vendor shares - at 21 cents each.
The IPO shares comprise two million shares for public subscription and 114.5 million shares for placement.
The offer shares represent about 26.4 per cent of the company’s enlarged share capital of 441.6 million shares. The IPO price of 21 cents gives the company a market capitalisation of $92.7 million.
The directors of the company intend to recommend a dividend payout of ‘not less than approximately 10 per cent’ of its net profit for FY2010.
The IPO is priced at a price-earnings ratio of 6.80 times based on its net profit of 64.3 million yuan (S$13.1 million) for FY2009 and on post-invitation share capital.
On prospects for the company, Leader Environmental Technologies said: ‘Our directors believe that the PRC economy is expected to continue with its growth, modernisation and industrialisation, which will lead to an increase in the demand for environmental protection services.’
Of the expected net proceeds of $16 million from the new shares, the group intends to use about $3.1 million to enhance its research and development activities and to acquire better systems and technologies for the treatment of waste gas.
About $0.6 million will go towards capital expenditures, including the purchase of heavy transportation vehicles and new machinery and equipment. A similar amount will be used to raise its sales and marketing activities and its network in China.
Some $10.3 million is earmarked for securing and handling larger environmental protection projects.
The remaining $1.4 million will be used as working capital to finance the group’s continued growth and development.
The group’s turnover grew from 146.3 million yuan in FY2008 to 181.7 million yuan in FY2009, during which periods net profit rose from 42 million yuan to 64.3 million yuan.
The offer closes on July 14 and trading of the group’s shares is expected to commence on July 16.
Stirling Coleman Capital Limited is the issue manager, underwriter and placement agent.
