Caymans move takes Cogo a step closer to debut on HK exchange

PUBLISHED : Tuesday, 09 August, 2011, 12:00am
UPDATED : Tuesday, 09 August, 2011, 12:00am


Cogo Group, a leading supplier of information-technology components to mainland manufacturers, has moved a step closer to a planned listing in Hong Kong, after last week completing a change of domicile to the Cayman Islands.

In a conference call with analysts, chairman and chief executive Jeffrey Kang said the change of Cogo's corporate domicile, from the United States, would allow the group to list shares in Hong Kong while continuing to trade on Nasdaq and 'maintain existing levels of regulatory scrutiny and financial transparency'.

The Caymans, a British overseas territory in the Caribbean, is a popular offshore tax haven with a flexible corporate regime. According to offshore law firm Walkers, 'companies registered in the Cayman Islands, British Virgin Islands, Bermuda, and Jersey to some extent, feature strongly among the listings on the Hong Kong stock exchange'.

Shenzhen-based Cogo, which was founded in 1995 and listed on Nasdaq in 2004, is the mainland's largest supplier of custom-designed embedded hardware and software used by manufacturers of smartphones, media tablets, high-definition television set-top boxes, personal computers, smart meters, medical equipment and cars.

It provides products from 400 information-technology companies - including Microsoft, Freescale Semiconductor and Broadcom - to 1,500 small and medium-sized enterprises and 100 large manufacturers, such as ZTE, a telecommunications equipment maker, and BYD, a maker of rechargeable batteries and cars.

'We believe that this dual listing of shares will broaden our shareholder base and consequently be a positive catalyst for the stock,' Kang said.

He did not provide the exact timeline of the listing, but said the process could take 'a few months'.

Will Davis, Cogo's chief marketing officer, projected that its third-quarter revenue would be in the range of US$130 million to US$140 million after posting what the company described as its 'strongest-ever second-quarter results'.

Revenue in the second quarter rose 47.9 per cent to US$134 million, from US$91 million a year earlier, due to significant sales in the telecoms equipment and industrial sectors. Net income grew 4.1 per cent to US$4.2 million.