CROCODILE skin tannery Heng Long International yesterday launched an initial public offer of 68 million new shares at 34 cents each for a listing on the main board of the Singapore Exchange. Heng Long is one of the world's top five crocodile skin tanners - and the only one in Asia.

Sixty-five million of the shares on offer are placement shares. The other three million are available to the public. The new shares represent 24.5 per cent of Heng Long's enlarged share capital. Based on the issue price of 34 cents and net earnings per share of 5.6 cents for the financial year ended Dec 31, 2007, the IPO shares have a price-earnings ratio of six.

Heng Long, set up in the early 1950s, has about 140 employees. It sources, tans and processes raw crocodile skins into crusts and finished leather. Its products are used to make things such as handbags, watch straps, shoes and garments by big names such as Prada, Stefano Ricci and Testoni.

The company plans to use part of the $23.1 million gross proceeds from the IPO to hire more staff to boost production. 'The proceeds will further improve Heng Long's already strong working capital position, enabling the group to offer more flexible and competitive terms to its suppliers and increasing its market share of the limited supply of crocodile skins,' said executive director Koh Choon Heong.

Heng Long also plans to invest in a larger tannery in the next three to five years, consolidating its two existing tanneries in Singapore which now process 281,000 crocodile skins a year. It hopes to capitalise on its position as one of only two independent crocodile leather tanners worldwide. 'We will be able to serve the fashion houses better, without conflict of interest,' said Mr Koh.

For FY2007, Heng Long reported revenue of $66.23 million, with Europe accounting for 57.5 per cent. Revenue the previous year came to $52.7 million. Net profit attributable to shareholders totalled $11.14 million, up from $6.15 million for FY2006.

The share offer closes at noon on July 7. Trading on the main board begins on July 9. CIMB-GK Securities is manager, underwriter and placement agent for the IPO.