First off : Action Asia, Challenger IPOs

Auto accessories maker Action to raise $22m; electronics retailer Challenger to raise $6.3m

By Kenneth Lim - Jan 06, 2004
The Business Times

THIS year's initial public offer market got off to a double-barrel start yesterday, with Action Asia and Challenger Technologies registering their prospectuses with the Monetary Authority of Singapore.

Action Asia, a holding company for Malaysia-based Action Malaysia, is offering 100 million shares at 31 cents apiece, or 9.45 times 2002 net earnings of $10.6 million. The offer is split into 10 million public offer shares and 90 million placement and reserved shares.

The invitation comprises 76 million new shares and 24 million vendor shares sold by several original stakeholders, including parent company Action Taiwan, which will continue to hold 50.18 per cent of the issued share capital after the invitation.

Action Asia hopes to raise $22 million in net proceeds, of which $10 million will be used to establish new manufacturing facilities, specifically in China and possibly Thailand. The remaining $12 million will be used as working capital.

A pioneering designer and manufacturer of mobile television and entertainment units for automobiles, Action Asia, which has a 15-year track record, believes it is poised to ride the next wave of 'must-haves' in automotive accessories - just as car stereos are now essential vehicle units.

The company claims to be the sole supplier of such units to the US-based supplier Audiovox, which has a market share of about 60 per cent.

A plant in China will allow Action Asia to keep costs down while staying close to major auto manufacturers, and the company is looking at the feasibility of working with car makers in China and Thailand directly, rather than through customers like Audiovox.

Challenger Technologies, the electronics retailer that owns the Challenger Superstores and smaller Matrix outlets, is also thinking of funding overseas expansion with an offer of 32 million new shares at 23 cents apiece, or 15.2 times 2002 net profit of $1.8 million.

Challenger aims to raise $6.3 million in net proceeds from the offer, which is split into one million public offer shares and 31 million placement, Internet placement and reserved shares. About $4 million of the net proceeds will be used to expand in Singapore and Malaysia, while $500,000 may be used to expand an electronic signage business overseas. The remaining $1.8 million will be used as working capital.

This will be Challenger's third attempt at regionalising its retail business, after closing its overseas operations in Brunei and Indonesia in 2001. Those attempts did not work out, said Challenger chief executive Loo Leong Thye, because the company was not familiar enough with the markets.

This time will be different, he said. Mr Loo said he has done business in Malaysia before and is familiar with the workings of the country. Also, the market is large and ripe across the Causeway, he said.

To allay any concerns, Mr Loo said he will not enter any new operation unless he believes it can turn profitable within a year.

Challenger's offer is lead-managed by SBI E2-Capital and closes Jan 12.

Trading on Sesdaq is expected to start Jan 14. OCBC Bank is lead-manager for Action Asia's IPO. That offer closes Jan 13 and trading on the main board is expected to start Jan 15.