China cloth firm's IPO to raise $16.6m

CHINA-BASED fabric maker Foreland Fabrictech launched an initial public offering (IPO) yesterday to raise net proceeds of $16.6 million to expand operations.

The firm, based in Jinjiang city in Fujian province, is offering 115.3 million shares at 21 cents apiece, for a total of $24.2 million. Of these, 3.8 million shares are for public subscription.

Foreland's founder and executive chairman, Mr Tsoi Kin Chit, will hold 64.6 per cent of the firm following the IPO.

In 2003, he ventured into the manufacture of specialist fabrics - ones that were combustion-resistant, odour-free, anti-bacteria and offered ultraviolet protection - in a shift away from regular fabrics.

The move paid off as Foreland's functional fabric business now accounts for 45.9 per cent of turnover, outstripping the conventional fabric segment, which now contributes 44.1 per cent.

For the year ended Dec 31, Foreland estimates that full-year net profit will grow by 143 per cent to 75.1 million yuan (S$14.7 million), while revenue will grow by 109 per cent to 314.6 million yuan.

The firm, whose fabrics are used to manufacture sports, leisure and business apparel, also said it will benefit from the Olympic Games to be held in Beijing next year.

To meet the higher demand, Foreland plans to use part of the net IPO proceeds of $16.6 million to build a new plant - expected to commence operations in the fourth quarter - and increase annual production capacity by 28.4 million yards.

'We also intend to widen our sales and marketing network by setting up sales offices in the main fashion cities such as Shanghai, Beijing, Guangzhou and Qingdao,' said Mr Tsoi.

Foreland plans to distribute 30 per cent of its net profit this year as dividends, and not less than 20 per cent of its net profit next year and in 2009.

The IPO will close at noon on Tuesday next week, and trading will commence two days later on Thursday.