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United Global to place 42.8m new shares at S$0.25 each in Singapore IPO
UNITED Global, a Singapore-based lubricant maker, has offered 42.8 million new shares at S$0.25 each for placement in its initial public offering (IPO).
The shares, which will be listed on the Catalist board, represent 15.13 per cent of the group's enlarged share capital of 282.8 million shares immediately after the IPO.
At S$0.25 each, the new share is priced at a multiple of 6.99 times the group's historical earnings per share of 3.6 Singapore cents for the financial year ended Dec 31, 2015.
The company plans to use the net proceeds of about S$9.2 million to expand and diversify its business. It "may also explore mergers and acquisitions, joint ventures, and/or strategic alliances" that complement its operations. It also intends to use some of the funds for research and development as well as to boost operational productivity.
"Upon the completion of the process improvement plan, the number of batches that we can blend per day is expected to increase. Barring unforeseen circumstances, we expect to commence the . . . improvements in the third quarter of 2016 and to complete them by the first quarter of 2017. The process improvement plan is estimated to cost approximately S$0.4 million and will be financed through internal resources and/or government funding," United Global said in its prospectus.
The company is also looking at expanding its presence in existing markets, as well as exploring possible collaboration opportunities in Myanmar and Bangladesh.
For the fiscal year 2015, it made a net profit of US$6.24 million, up from US$3.37 million in FY2014 and US$3.27 in FY2013. Revenue was US$99.86 million in FY2015, US$118.69 million in FY2014 and US$102.15 million in FY2013.
Looking ahead, its directors expect sales volume in the manufacturing business segment to increase moderately in line with the expected growth in the global lubricant market, while sales volume in the trading business segment to decrease due mainly to an expected decrease in orders from the Greater China region as a result of expected increase in competition.
The average unit selling price of its products is expected to be lower than last year. Hence, overall profit margin is seen falling marginally.
". . . our directors are of the view that our revenue and profit for FY2016 may not be at the level of that in FY2015", it said.
After the placement, United Global's non-executive chairman, Wiranto (name as given in final prospectus), and executive director and chief executive officer Jacky Tan will hold 50.9 per cent and 34 per cent of the company respectively. Mr Wiranto is the father-in-law of Mr Tan.