- Net proceeds to be used mainly for expansion in China
SINGAPORE - 13 January 2003 - Hitchins Group Ltd ("Hitchins"), a regional integrated waterproofing and building protection solutions provider, today launched its initial public offering (IPO) of 20 million shares at 20 Singapore cents each in conjunction with its listing on SGX SESDAQ.
Of these 20 million shares, 4 million shares are available for public subscription, a minimum of 13 million shares for placement, and up to 3 million shares reserved for management, Independent Directors, employees, business associates and those who have contributed to the success of the Group.
This share offering, which represents an estimated 18.4% of Hitchins' enlarged share capital of approximately 108.6 million shares, is offered at a historical price earnings ratio of 7.7 times based on the audited net earnings per share for the financial year ended 30 June 2002.
The invitation, which is managed by SBI E2-Capital Pte Ltd, opens on 13 January 2003 and closes at noon on 21 January 2003. Trading of Hitchins' shares, in board lots of 1,000 shares each, will commence on a "when issued" basis on 23 January 2002.
According to Hitchins, out of the net proceeds of approximately $2.6 million, $0.5 million will be used to expand the Group's current market coverage in China, Thailand and the Philippines. Another $1.0 million will be used to expand the production capacity in the Group's manufacturing facility in China; $0.5 million to further improve the Group's R&D facilities and the remaining $0.6 million as working capital.
With a history that dates back to 1932, Hitchins is one of the region's leading chemical specialists in waterproofing and building protection. An integrated solutions provider, Hitchins conducts R&D to develop its own proprietary brand of waterproofing and building protection products; manufactures these products under the "Hitchins" brand name; and installs them on-site. Currently, the Group owns more than 30 trademarks all over Asia.
Armed with its proprietary brands and backed by a 35-year track record in Asia, Hitchins has provided building protection solutions and supplied waterproofing materials to thousands of projects in 13 countries, ranging from infrastructure projects; commercial and industrial buildings; institutions; residential buildings; and restoration of monuments. Its network of 29 trained and approved applicators are located in Brunei, China, Hong Kong, India, Indonesia, Malaysia, Myanmar, South Korea, Sri Lanka, Singapore, Thailand, Vietnam and the Philippines.
"Our products are used not only in new buildings but also to maintain and restore old buildings. So in more mature markets like Singapore and Hong Kong, our products can be used for the maintenance of old buildings, while in developing markets like China and India, our products are used more extensively in the construction of infrastructure and new buildings. So we are able to tap on the opportunities of both market segments in mature and developing economies," said Mr Michael Wong, Managing Director of Hitchins.
Led by an experienced management team, with each of the executive directors having more than 20 years experience, Hitchins has been able to successfully grow its business regionally as it has been able to respond quickly to changing market conditions and trends.
Due to its decision to relocate its manufacturing operations from Singapore to China to cut costs in FY2001, the management was able to improve margins and raise profit before tax from $0.3 million in FY2001 to $2.7 million in FY2002, on the back of a 23.5% rise in sales from $10.2 million to $12.6 million.
Growth strategy - China as the driving force for future growth
In outlining its plans for future growth, Hitchins has identified China as the driving force. Having entered the market since 1996, Hitchins has obtained approval licences to sell its products in Shanghai, Beijing, Fujian, Quizhou, Shenzhen and Dalian. Through its marketing offices located in Shanghai, Beijing, Dalian and Shenzhen, Hitchins has secured numerous contracts for prominent infrastructure projects such as the QingHua University Swimming Complex and the Olympic Square in Dalian, which comply with the standards set by the National Olympics Council and are used as training grounds by the Chinese Olympic teams; the Xuan Wu Lake vehicular tunnel in Nanjing; the Xintiandi commercial development in Shanghai; and several MRT stations in major cities in China.
"With our recognised products and well established track record, the Hitchins Group is well positioned to tap into the construction and infrastructure development boom that will result from the 2008 Olympic Games and the 2010 World Expo in Shanghai," said Mr Wong.
To increase its market coverage in China, Hitchins intends to set up new marketing offices in Chongqing and Guangzhou by end 2003 and over the longer term, Chengdu, Nanjing, Qingdao, Shenyang, Wuhan and Xiamen.
Growth strategy - Expanding in Thailand and the Philippines
In addition to China, Hitchins will also be looking at setting up new offices in Thailand and the Philippines, as well as expand its approved applicator network in Malaysia.
Growth strategy - Decentralise manufacturing activities
Hitchins is also looking to adopt a decentralised manufacturing strategy to enjoy lower costs of production and to reduce high shipping costs and tariffs. In addition, having a local manufacturing presence would allow a shorter response time to market trends and demands. Two of the locations under consideration are Malaysia and India.
Growth strategy - Increase product range through R&D
Hitchins will continue to enhance its R&D capabilities to develop new products such as roof garden systems.