Boer targets HK$1.2b in initial share offering
Boer Power Holdings, the mainland's largest domestic electrical distribution systems maker, aims to raise HK$1.2 billion via an initial public offering to double output capacity.
Its products deliver suitable volumes and voltages of power from the local power grids to customers' facilities, and provide them with energy-saving solutions. It serves the infrastructure, construction, telecommunications, water and waste-water processing, cement and health-care industries.
Net profit grew 141 per cent year on year in the first half to 87.5 million yuan (HK$101.3 million). Gross profit margin grew to 36 per cent from 31 per cent.
Net profit was 85.22 million yuan last year, up from 52.35 million yuan in 2008, as sales rose to 490.7 million yuan from 405.5 million yuan. The company forecast net profit of no less than 180 million yuan this year.
It plans to spend 120 million yuan to build a new plant in Wuxi, Jiangsu province. An extra 55 million yuan will be spent on new production lines at the plant, which will have double the capacity of the existing one.
Roland Berger, a consultant hired by Boer, said the mainland's electrical distribution equipment market grew by an annual average of 16 per cent between 2004 and 2008 and is projected to post similar growth until 2012.
Boer said the 'high-end electrical distribution equipment' segment it operates in had total revenues of 15 billion yuan in 2008, accounting for 4.6 per cent of the nation's total electrical distribution equipment market. Within the segment, the company said it ranked sixth by sales in 2008, of which the top five players were international firms or their China joint ventures.
The market was led by ABB China's 5.6 billion yuan revenue, followed by Siemens China's 3 billion yuan, Shanghai GE Guangdian's 1.12 billion yuan, Suzhou Areva's 620 million yuan, Eaton Changzhou-Senyuan's 440 million yuan and Boer Power's 410 million yuan.
Since 1998, Boer has entered into a licensing agreement with France-based Schneider Electric to use Schneider parts to make electrical distribution systems on the mainland. Schneider is Boer's largest supplier and customer, accounting for one-fifth of Boer's revenue and cost of sales in the first half of this year.
Boer warned in the prospectus that new contracts are difficult to predict as its business is predominantly project-based and are subject to the bidding process.
The company will offer 187.5 million shares at HK$4.38 to HK$6.38 each. The shares are expected to be listed on October 20. Fund manager Value Partners has pledged to buy US$18 million of the shares and listed power, water and gas meters maker Wasion Group Holdings has agreed to buy US$6 million of its shares.