Wong Fong Industries launches IPO on Catalist board
Placement of 43m shares at S$0.23 each to expand facilities, for acquisitions
Singapore
AS part of efforts to expand and diversify its business, Wong Fong Industries has launched its initial public offering (IPO) on the Catalist board.
Registering its prospectus on Tuesday, the homegrown land transportation engineering systems provider announced its offer of 43 million placement shares, priced at S$0.23 apiece, raising a total of S$8 million in net proceeds. With a total issued share capital of 235 million shares, Wong Fong is valued at about S$54.1 million.
The firm said that it intends to propose a dividend payout of "not less than 20 per cent of net profits attributable to owners of the company" in each of FY2016 and FY2017.
The placement of shares will close at noon on July 26, and trading is expected to begin on July 28.
For FY2015, Wong Fong posted a net profit of S$5.6 million, down from S$6.2 million in FY2014; revenue too, dipped to S$77.6 million, down from S$79.7 million previously.
The dip in earnings was due to the "challenging environment" along with a one-off foreign exchange loss of approximately S$0.5 million from its operations in Malaysia, Wong Fong executive director Eric Lew said at a media briefing. "If you take out the one-off expenses, our bottom line from 2014 to 2015 is actually ... (stable) and we forecast that, going forward, there is still a lot of room for growth," Mr Lew said.
He cited "healthy demand" for its services from the construction and logistics industries, arising from the Automation Support Package by the government, which will see small and medium-sized enterprises hire solutions providers such as Wong Fong to improve their productivity.
To meet that demand, Wong Fong intends to use a quarter of its IPO proceeds to expand its service and production facilities; acquisitions was also mooted as a means for expansion.
As at June 15, its order book stood at S$42 million; while cash and cash equivalents was at S$16.4 million in FY2015. While there isn't a fixed timeline as to when the acquisitions will happen, "there are a lot more people (post-IPO) who are more open to (talking) to us", Mr Lew said. He expressed hopes that an acquisition could take place "in the next few months".
Another key area of growth is training and education, Wong Fong said. In FY2015, training services contributed 0.6 per cent, or S$466,000, to its top line earnings. "The government is investing a lot in SkillsFuture and they are giving out a lot of grants, so they start to qualify all the training centres . . . and we expect to see consolidation in this market," Mr Lew said.
Weighing in on the timing of the offering - what with Brexit and challenging industry conditions - Mr Lew added: "Well, when the water is low, everything is also low, and it is a good time for us to do investments. When we started this IPO, people said, 'Brexit - die, die, die', but now, Dow Jones is at a record high, S&P 500 is at a record high. It's schizophrenic, the market - we can't control all these, but we just do our job."
