PETALING JAYA: After almost a year of delay, China-based Sozo Global Ltd has finally secured investors to take up the placement of shares for its initial public offering (IPO).
Sozo, a manufacturer of frozen food products such as duck meat and seafood, plans to launch its prospectus in the first week of December and get listed on Bursa Malaysia before the end of the year.
It had first announced plans to list in January this year but had found it challenging to secure investors then.
Shen Hengbao ... 'Investors have come to know us better.' Market conditions and the sentiments on China companies were working against us then.
But the investors have come to know us better since then; after site visits, and our financial numbers this year were further proof that our business is sustainable, said Shen Hengbao, chief executive and co-founder of the company.
Shen, however, declined to disclose the names of the investors but added that they comprised 12 parties, made up of institutions and high net worth individuals.
Sozo's IPO involves the issuance of 74.1 million shares (of which 55 million are new shares and the balance 19.1 million are an offer for sale of existing shares).
A total 50 million of the 74.1 million shares are being placed out while the remainder 24.1 million will be offered to the public.
Shen could not reveal the IPO price of Sozo shares in accordance with listing rules.
However, bankers familiar with the exercise said the Sozo IPO was being priced around 5 times its earnings for the year ended Dec 31 (FY09).
Sozo reported a net profit of 150 million yuan (RM70mil) for FY09. Its net profit for the first six months ended June 30 amounted to 93 million yuan (RM43.4mil).
This has been a comforting fact to our investors, that we are doing better than the year before and yet our IPO price is based on a low multiple of our FY09 earnings, Shen said.
The shares allocated for the public have been underwritten by AmInvestment Bank and JF Apex Securities.
Sozo will be the sixth China-based company to list on Bursa Malaysia.
Earlier this month, shares in China Ouhua Winery Holdings Ltd, which produces and distributes red and white wine, were offered at 60 sen a share, which was priced at a historical price earnings of seven times earnings. Its shares are trading above its IPO price. The other China listed stocks are mostly trading below their IPO prices.
There had been a concern that institutional investors were reluctant to take up shares in Chinese companies and were sceptical of their earnings following accounting irregularities involving several China-based companies listed in Singapore.
In Sozo's case, some investors may take comfort in the fact that Khazanah Nasional Bhd was a pre-IPO investor. Khazanah, which bought convertible papers issued by Sozo, is said to have converted them into shares.
According to Sozo, Agro Treasures an outsourced fund initiated by Khazanah and managed by Vida Inc Sdn Bhd for investment in the agricultural and food sector will have about 10.4% in Sozo post the latter's listing, as a result of the conversion of its debt papers into Sozo shares. Khazanah is not selling any Sozo shares in the IPO.
Shen said part of the reason for Sozo's listing in Malaysia was because Sozo had plans to make Malaysia the location of Sozo's halal food processing facility to target the huge global halal food market.
Shen added that Sozo was in a net cash position of 383 million yuan (RM180mil) as at June 30, 2010.
