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Chinese apparel firm seeks local listing

Chinese apparel firm seeks local listing Source:
Date: 13-05-2013
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Chinese sports apparel manufacturing firm Hengda Group Holdings Corp. has set its sight on listing in the Philippine Stock Exchange and is buying into a local competitor to establish a footprint in the country.
This is the latest on a number of Chinese nationals who brought investments into the Philippines, underscoring the Philippines growing attractiveness, analysts said.
Leonardo Arguelles, Unicapital Securities, Inc., managing director, said Hengda intends to raise as much as P3.1 billion by offering as much as 26 percent of the company’s float, post-IPO (initial public offering).
Arguelles said they have filed the initial documents with regulators and responses had come out with minimal clarification.
"We still have to go through the customary book-building to see how much we can really raise,”said Arguelles.
Arguelles said it is likely that the listing would push through by July. He, however, failed to provide a copy of the company’s prospectus.
"This year is special as it marks a key milestone for our Group --- we have applied to be listed on the Philippine Stock Exchange (PSE) and if all goes according to plan, we will be the first foreign company to be publicly traded on the PSE,”said Ding Jianming, Hengda chairman, during the company’s announcement of plans to partner with local sports manufacturing firm Sporteum Philippines, Inc.
"This MOU (memorandum of understanding) also represents yet another milestone for Hengda in our ongoing quest to expand into new markets. It has always been our strategic objective to present high quality and desirable sporting good to the market,”added Jianming.
Hengda, however, will not be the first foreign company to be listed with the PSE since companies like Sunlife and Manulife are also overseas-based firms that are listed with the PSE.
As part of Hengda Philippine venture, the company is in discussion with Sporteum, manufacturers of local sports shoes Accel, for a 40 percent acquisition of the company.
Philip Go, Sporteum chiarman, said due dilligence will run for three months before a decision is made on the final valuation to be used and whether to sell as much as 40 percent.
Part of the“merger”of the two companies is the marketing into the Philippines of Hengda’s“Vobu”line of shoes, and into China of Sporteum’s Accel.
"This MOU brings forth a win-win partnership. We see value in Sporteum’s extensive distribution network in the Philippines and vast experiences in retail sales and marketing of sporting goods in this country. Similarly, Hengda Group offers a unique, lucrative market access to China for Sporteum’s Accel products, leveraging on Hengda Group’s manufacturing and design capabilities and vast distribution network across 20 provinces in China,”said Jianming.
Hengda through unit Mingyi Shoes and Garments Co., Ltd., incorporated in Jinjiang, Fujian, China, manufactures Vobu in China.
Go said Vobu products will be repackaged for marketing in the Philippines, working to ensure that it will not compete with Accel’s 10-15 percent share of the local sports shoes market.
Go said that when Vobu’s introduction is made by the end of the year, they expect the new brand to corner about 7-10 percent of the shoes market“in 18 months.”
To differentiate from Accel, Go said Vobu will be marketed into the lifestyle segment of the shoes market, compared to Accel’s niche in the affordable sports shoe segment.
In China, Vobu shoes sell for RMB300-RMB500 or about P1,800 - P2,000 a pair.
Go expressed confidence on the prospects of the new shoe line, noting Sporteum’s growth of 9 to 10 percent every year.
"The plan is to grow annually between 9-10 percent. With Vobu, we expect a 20-25 percent growth in topline for the first year,”said Go.
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