Merry Garden IPO target US$207m
Merry Garden, a Fujian-based producer of timber products, kicks off its initial public offering today, aiming to raise as much as HK$207 million in a test of investor sentiment in a sluggish economic environment.
The company, which produces timber cabins, landscape garden products and other leisure goods, such as swings and pet houses, plans to issue 180 million shares in its global offering, 90 per cent of which will be offered internationally and the rest in Hong Kong.
With a price range set between HK$1-HK$1.15 per share, the public offering's size could reach between HK$180 million and HK$207 million, assuming the over-allotment option is not exercised.
The public offering would end on Friday, and the company was talking with two or three big investors, said Donny Wong Dongqing, executive director of Guotai Junan International, the sole book runner and global co-ordinator.
Wong said Merry Garden was expected to make a profit of 93 million yuan (HK$113.9 million) this year. The company earned a net profit of 70.7 million yuan last year.
'We think that the landscaping and timber villa business from resorts and tourist attractions will be a major growth driver going forward,' said Wu Zheyan, chairman and chief executive officer at Merry Garden.
Even though the company launched its own brand, Merry Garden, in 2010, most of its business comes from production orders from other companies.
For the first four months of this year, only 29.8 per cent of revenue came from products sold under the Merry Garden brand.
The mainland accounted for nearly 57 per cent of the company's sales, while North America took up 26 per cent and Europe accounted for 11.5 per cent in those four months.
The products are sold overseas to trading companies and retailers through networks in North America, Europe and the Asia-Pacific.
The company hopes to further promote its own brand and also expand its retail distribution channel with the proceeds from the public offering. It opened its first self-operated store in December last year in Fujian province.
Leisure household products accounted for 70.8 per cent of revenue last year, while timber villas accounted for 26.5 per cent. Merry Garden plans to open five flagship stores in major mainland cities and 20 self-operated stores selling its own brand of products by 2014.
Many small companies have delayed their IPOs since late last year owing to the poor prospects of a strong rebound in stock markets soon.