Pine Agri's IPO placement shares all taken
By Ven Sreenivasan
May 06, 2005
The
Business Times
ALL 145 million placement shares from China-based soybean products
maker Pine Agritech's initial public offering have been subscribed
for, just a day after applications opened, sources told BT.
The mainboard-bound company offered 150 million new shares, representing
a quarter of its restructured capital. At 57.5 cents, the shares
are priced at 20.1 times FY2003 earnings and about 9.6 times estimated
FY2004 earnings.
The company plans to use the bulk of its $80.7 million net proceeds
to expand capacity to meet demand for its products.
Pine, which has plants in the Shandong and Heilongjiang provinces
of China, makes soy protein isolate, which is widely used as a key
ingredients in processed meat and dairy products. The isolates accounted
for two-thirds of sales and profit last year.
Its other products include defatted soy flakes and soy oil.
BT understands that Singapore-listed Peoples' Food Holdings, one
of China's largest processed meat producers, purchases about 42
per cent of its soy protein isolates from Pine, and accounted for
24 per cent of Pine's sales last year.
Peoples' Food bought a 49 per cent stake in Pine for about US$27
million late last year, and Peoples' Food's chairman Ming Kam Sing
is the non-executive chairman of Pine. People's Food's stake will
be diluted to 37 per cent after the float.
Speaking to BT yesterday, Pine co-founder and chief executive Li
Zhuping cited the company's growth potential as its strongest selling
point to investors. 'We can't produce enough to meet demand,' he
said. 'Our current capacity of 50,000 tonnes in soy protein isolate
is sold entirely in China, and we control 40 per cent of the market.
And we are not even into the export market yet.'
Pine increased its capacity by 67 per cent to 50,000 tonnes last
year, and plans to raise it to 90,000 tonnes by early next year.
'Our earnings for the next two years will be driven by additional
capacity, greater economies of scale, improved cost structure and
new products,' Mr Li said.
Pine has promised investors a dividend payout of at least 20 per
cent of net profit for FY2005 and FY2006. The shares start trading
on May 12.
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