IPO - Kanger Intl Bhd (Sultan Of Perlis as shareholder)

It is a China’s bamboo flooring maker.

It is raising rm20 million from selling 80 million shares at 25 sen per share.

Of the 80 million new shares, 11 million are for public subscription while 69 million have been placed out to selected investors. The 11 million shares for the public are underwriten by Kenanga.

About rm8.2 million of the proceeds is for working capital while rm5.5 million will be used to repay debt. That leaves rm1 million for capital expenditure and rm2 million for R&D after setting aside rm3.3 million for listing expenses.

Set up in 2004 by MD Leng Xingmin’s family to undertake the trading of bamboo flooring and related products, Kanger entered into an agreement with FRIM in 2011.

On the financial side, it made rm6.37 million in net profit in FY2012 ended Dec 31 on the back of rm38.56 million in revenue.

Based on its enlarged 430 million shares base, it is valued at 16.8 times its FY2012 earnings of rm6.4 million at its IPO price.

While it does not have a formal dividend policy, the group expects to earmark along 20% of its future annual net profit as dividends.

Leng’s 67.77% stake in the company will be diluted to 55.17% post IPO while Lim Lai, a Malaysian will see her stake diluted to 13.19%. Chinese national Leng cannot sell any of his shares in the company in the first six months of listing and needs to keep his stake above 45% in the subsequent six months of listing.

Lim and six other shareholders who collectively holds 26.22% of the company post IPO have their entire block under moratorium for three months thereafter. Among the six shareholders are Tuanku Syed Sirajuddin Tuanku Syed Putra Jamalullail, the current Sultan of Perlis and his younger brother Syed Razlan Tuanku Syed Putra Jamalullail. They each hold a 3.2% stake in the company.

There are about 200 bamboo manufacturers across China and Kanger intends to widen its domestic distribution network and increase awareness of its products and brand through the appointment of third party dealers.

It is looking to grow its exports. Overseas accounted for 49% of FY2012 revenue and 20% of revenue for the six months ended June 30.