Hengyang to be first Chinese firm to list on Catalist
By LYNETTE KHOO 02 October 2009
Hengyang Petrochemical Logistics is on its way to become the first Chinese firm to list on the Catalist board.
It is offering 18 million new invitation shares at 38 cents apiece, and will be sponsored by CIMB Bank Berhad, Singapore Branch.
Chinese companies have traditionally headed for the mainboard here. But this seven-year-old firm, which already meets mainboard criteria, wants to grow bigger on the Catalist before upgrading to the mainboard.
‘Our feet are firmly on the ground,’ said Chinese-speaking chief executive Gu Wen Long. ‘We are at a growing stage and so we hope to gain market awareness through the Catalist and attain a bigger scale before heading for the mainboard in two years.’
The firm counts among its over 60 clients big names such as Sinopec, China National Offshore Oil Corporation and Shell Petrochemicals.
Banking on the strong outlook for the petrochemical industry, the group is still making strident steps in expansion from its current storage capacity of 97,600 cubic metres from 37 storage tanks.
Its current construction of 12 storage tanks with total capacity of 42,000 cubic metres at its existing facility is internally funded and slated to be completed this quarter.
Hengyang will add a new facility comprising 118 new storage tanks with a total capacity of about 300,000 cubic metres, as well as a new petrochemical jetty. This project will take place in two phases, with the first phase covering the jetty and 42 tanks of 126,000 cubic metres.
The estimated cost for phase one is about 240 million yuan (S$49.6 million), and will be funded by a combination of internal resources, IPO proceeds and bank borrowings.
Besides the net IPO proceeds of about $4.5 million, Hengyang recently secured a bank loan of 120 million yuan. As at July 31, its cash and cash equivalents came to 95.75 million yuan.
While revenue of the group has risen steadily in the past three years, its net profit in 2008 saw a 14.8 per cent decline to 25.92 million yuan as higher overheads outpaced the 9.7 per cent growth in revenue to 65.33 million yuan.
Mr. Gu told BT that the group chose to list in Singapore for three reasons.
Firstly, it is attracted to the level of order and transparency in this market. ‘Moreover, Singapore is an important petroleum chemical hub where our company can enjoy better understanding of the business,’ he said. ‘Thirdly, we hope to achieve a stable long-term growth by gaining support from long-term investors.’
He noted that the Hong Kong market is not as familiar with this industry as Singapore, which he also deemed a more mature market than China.
But Mr. Gu admitted that the financial crisis and fallout in some S-chips prompted him to stretch the IPO timeline. The group had kick-started the IPO process by engaging auditors since April last year.
‘It has been a problem of market perception for S-chips,’ he said. ‘But the market is fair, whether it is Singapore, Hong Kong or the US. I believe time will tell. If a business is good, it will be well-received in whichever market it decides to list.’
CIMB-GK Securities is the placement agent for the IPO. Priced at 7.2 times its fiscal 2008 earnings per share, the stock is scheduled to debut on Oct 9.
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Hengyang to be first Chinese firm to list on Catalist
By LYNETTE KHOO
02 October 2009
Hengyang Petrochemical Logistics is on its way to become the first Chinese firm to list on the Catalist board.
It is offering 18 million new invitation shares at 38 cents apiece, and will be sponsored by CIMB Bank Berhad, Singapore Branch.
Chinese companies have traditionally headed for the mainboard here. But this seven-year-old firm, which already meets mainboard criteria, wants to grow bigger on the Catalist before upgrading to the mainboard.
‘Our feet are firmly on the ground,’ said Chinese-speaking chief executive Gu Wen Long. ‘We are at a growing stage and so we hope to gain market awareness through the Catalist and attain a bigger scale before heading for the mainboard in two years.’
The firm counts among its over 60 clients big names such as Sinopec, China National Offshore Oil Corporation and Shell Petrochemicals.
Banking on the strong outlook for the petrochemical industry, the group is still making strident steps in expansion from its current storage capacity of 97,600 cubic metres from 37 storage tanks.
Its current construction of 12 storage tanks with total capacity of 42,000 cubic metres at its existing facility is internally funded and slated to be completed this quarter.
Hengyang will add a new facility comprising 118 new storage tanks with a total capacity of about 300,000 cubic metres, as well as a new petrochemical jetty. This project will take place in two phases, with the first phase covering the jetty and 42 tanks of 126,000 cubic metres.
The estimated cost for phase one is about 240 million yuan (S$49.6 million), and will be funded by a combination of internal resources, IPO proceeds and bank borrowings.
Besides the net IPO proceeds of about $4.5 million, Hengyang recently secured a bank loan of 120 million yuan. As at July 31, its cash and cash equivalents came to 95.75 million yuan.
While revenue of the group has risen steadily in the past three years, its net profit in 2008 saw a 14.8 per cent decline to 25.92 million yuan as higher overheads outpaced the 9.7 per cent growth in revenue to 65.33 million yuan.
Mr. Gu told BT that the group chose to list in Singapore for three reasons.
Firstly, it is attracted to the level of order and transparency in this market. ‘Moreover, Singapore is an important petroleum chemical hub where our company can enjoy better understanding of the business,’ he said. ‘Thirdly, we hope to achieve a stable long-term growth by gaining support from long-term investors.’
He noted that the Hong Kong market is not as familiar with this industry as Singapore, which he also deemed a more mature market than China.
But Mr. Gu admitted that the financial crisis and fallout in some S-chips prompted him to stretch the IPO timeline. The group had kick-started the IPO process by engaging auditors since April last year.
‘It has been a problem of market perception for S-chips,’ he said. ‘But the market is fair, whether it is Singapore, Hong Kong or the US. I believe time will tell. If a business is good, it will be well-received in whichever market it decides to list.’
CIMB-GK Securities is the placement agent for the IPO. Priced at 7.2 times its fiscal 2008 earnings per share, the stock is scheduled to debut on Oct 9.
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