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SCMP Reporter

Troubled Singapore garment manufacturer and store operator Heshe Holdings is hoping to win a new lease of life through a proposed dual listing of its profitable north Asian operations in Hong Kong and Singapore.

  It plans to restructure the group so that its China, Taiwan and Hong Kong apparel businesses can be grouped under Benefun International Holdings, which would have a primary listing in Hong Kong and secondary listing on Singapore's main board.

 If approved, it would be the first simultaneous dual listing in Hong Kong and Singapore. It would also reverse the recent trend of Hong Kong companies listing in Singapore.

  Benefun distributes garments and accessories under the Benetton, 012 and Sisley brand names through 20 stores in Hong Kong and 56 in Taiwan.

  It has established more than 260 retail outlets in China, with a chain of stores operating under the Matro name, selling a range of denim and casual wear under Fun and Kaimara labels.

 Its China operations are its most lucrative.

 Benefun has been asked to jointly develop the Benetton name in China.

  In the past financial year to June 30, Benefun would have achieved a pro-forma turnover of HK$544.2 million and a taxed profit of $38.8 million.

  Through the Benefun spin-off, Heshe hopes to generate enough funds to turn around and redirect its Singapore business. It wants to exit Singapore's struggling clothing trade and take on new core businesses such as health and consumer foods, which it believes have greater potential in the republic and region.

  Heshe chairman Chia Shi Teck said: 'It is common knowledge that all Singapore companies involved in apparel retailing and/or garment manufacturing are going through very tough times.

 'Heshe understands that it will have to get out of the apparel trade in so far as Singapore is concerned.

 'On the other hand, its apparel trade overseas, particularly in China, Hong Kong and Taiwan, has potential for growth.'   The group reported a S$12 million (about HK$64.44 million) loss last year, dragged down by its Singapore retailing and export garment manufacturing businesses. Its North Asia operations chalked up a pre-tax profit of $7 million.

  Like many other manufacturers in Singapore, Heshe has been adversely affected by rising wages and operating costs, and the appreciation of the Singapore dollar against the currencies of its key export markets.

 It has closed down its shops in the republic and cut the workforce in its export garment manufacturing division by 80 per cent to 220 workers.

 It hopes a separate listing would provide its north Asia operations with the autonomy and flexibility to chart its own growth and competitive strategies.

  Mr Chia said: 'The negativism brought about by the huge losses in Singapore had in fact stifled the growth of our overseas subsidiaries.

 'The initial public offering will enable Benefun to raise fresh capital to finance the expansion of its operations, and provide it with independent access to the capital markets to support future growth.'  The listings, once approved by an extraordinary shareholders meeting, should occur next month. DBS and NatWest are lead underwriters.



Heshe seeks new life from listing