PETALING JAYA: Leong Hup International Bhd, which derives 70% of its revenue from overseas, will build its first feedmill and new chicken farms in the Philippines starting from the third quarter of this year as the company accelerates expansion in its newest market.
The expansion will be funded by proceeds from its initial public offering (IPO).
Executive director and group chief executive officer Tan Sri Francis Lau told reporters during the prospectus launch yesterday that the company has allocated RM120mil to grow its business in the Philippines.
Leong Hup is targeting to raise up to RM1.2bil from its IPO that includes an offer for sale of shares held by existing shareholders and the issuance of new stocks.
The IPO involves the offer for sale of 937.5 million shares or 25.68% of the company. This excludes an over-allotment option that could increase the public shareholding spread to 29.54%.
The IPO comprises an offer for sale of 687.5 million shares by existing shareholders – the Lau family and private equity firm Affinity Equity Partners – and the issuance of 250 million new shares at RM1.10 each.
Of the total amount to be raised, RM275mil will go to the company. Leong Hup said RM207.7mil, or 75% of the amount, would be set aside for business expansion.
The Philippines is the biggest recipient of the proceeds from the IPO, followed by Vietnam (RM47mil) and Malaysia (RM40.7mil).
About RM33mil will be set aside as working capital, while the remaining amount will be used to defray fees and expenses for the listing exercise.
“Going forward, we will remain focused on implementing our business development strategies to ensure business continuity and growth,” Lau said.
“To begin with, we will further increase our visibility and presence in Malaysia, Vietnam and the Philippines,” he added.
Lau said the company plans to consolidate and expand its position in Malaysia and Singapore by driving efficiencies and continually improving its processes and adding capacity where possible.
“We will continue to increase the use of our own broiler farms in Malaysi, in order to control quality and increase efficiency. We intend to replicate this approach in Indonesia and Vietnam too, ” he said.
The company made a net profit of RM247mil on a revenue of RM5.5bil in the financial year ended Dec 31, 2017.
In the first ten months of 2018, net profit had reached RM219.8mil on a revenue of RM4.69bil, rising at a faster pace compared with the corresponding period in 2017.
Maybank Investment Bank Bhd is the principal adviser, joint global coordinator, joint bookrunner, managing underwriter and joint underwriter for the IPO.
The IPO is also supported by Credit Suisse units in Malaysia and Singapore, RHB Investment Bank Bhd, AmInvestment Bank Bhd, Hong Leong Investment Bank Bhd and Kenanga Investment Bank Bhd.