Friday 29 Mar 2024
By
main news image

This article first appeared in The Edge Financial Daily on May 17, 2019

KUALA LUMPUR: Leong Hup International Bhd gave up early gains to finish flat at its initial public offering (IPO) price of RM1.10 yesterday as it made a comeback on Bursa Malaysia as the year’s first Main Market listing.

Opening at a two sen premium, the stock climbed steadily to a peak of RM1.19, representing an 8.2% premium to its issue price, within the first few trading minutes. Thereafter, it pulled back to as low as RM1.08 before closing at the issue price. The integrated poultry producer was the top active counter on Bursa throughout yesterday, with a total turnover of 215.4 million shares, accounting for 12.6% of the market’s overall volume of 1.71 billion shares.

This came as the overall market sentiment remained cautious. The FBM KLCI finished 12.24 points or 0.76% lower at 1,599.19 as US-China trade tensions escalated after news broke that Washington had imposed a ban on Chinese telecommunications giant Huawei Technologies Co Ltd and its 70 affiliates from buying parts and components from American companies without US government approval.

Leong Hup International is the new name of the restructured Leong Hup Holdings Bhd, a Main Market-listed company controlled by the Lau family that was delisted in April 2012 following a privatisation exercise. It controls two listed companies, namely egg producer Teo Seng Capital Bhd and Indonesian integrated poultry player PT Malindo Feedmil Tbk.

Speaking at the listing ceremony yesterday, Leong Hup International group chief executive officer Tan Sri Francis Lau Tuang Nguang pointed to Teo Seng’s stellar quarterly earnings growth in stressing that the group is not overly concerned about external factors.

He added that the overwhelming demand for its IPO of 937.5 million shares had validated the group’s decision to relist on the Main Market.

Lau said the group’s years away from capital markets were spent on restructuring and growing its geographical footprint, making Leong Hup International now one of the largest fully integrated producers of poultry, eggs and livestock feed in Southeast Asia.

“As long as the population in the Asean region keeps growing … and [with the] increasing per capita income in this region, the market size keeps increasing. We are already one of the largest today, but we think that as long as the market grows, we will be able to tap the growth,” said the group’s chief financial officer Chew Eng Loke.

Chew said the group is open to mergers and acquisitions going forward, adding that there is still headroom for the group to gear up given that its gearing net of cash is at about 0.9 times.

Meanwhile, the group will be using 75.2% of the gross proceeds of RM275 million successfully raised from the public issue for its capital expenditure to facilitate the expansion of its operations domestically and regionally in Vietnam and the Philippines.

This includes the construction of 32 closed-house farms in its existing broiler farms in Malaysia to boost production by 10.4 billion broilers per annum by 2020, as well as further expansion of the group’s existing plants and farms in Vietnam.

The largest chunk, RM120 million, will be used to increase the group’s presence in the Philippines which has a population of 104.9 million. A further 12% of the proceeds will be used for working capital, and the balance of 12.5% will be used to defray fees and expenses for the listing exercise.

Leong Hup International’s RM1.03 billion IPO — the largest since Lotte Chemical Titan Holding Bhd’s in 2017 — entailed the issuance of up to 937.5 million shares, representing 25.68% of the enlarged issue and paid-up share capital of the group.

It comprised an offer for sale of up to 687.5 million existing shares and a public issue of 250 million new shares.

      Print
      Text Size
      Share