Firm targets 300pc capacity increase with completion of new plant in 2009 Neo-Neon Holdings, one of the world's largest makers of decorative lighting, plans to increase its production capacity to 4.8 billion LED light bulbs a year after completion of a new production plant in 2009, chairman Ben Fan said yesterday. 'LED lighting will replace traditional lighting in the future because of its greater benefits through its energy saving and environmentally friendly features,' he said. The production target is a 300 per cent increase on its current annual manufacturing capacity of 1.2 billion bulbs. 'We will spend more resources on the development of our LED lighting business, bringing us higher overall profit margins.' Product revenue from LED-based sales accounted for 23.7 per cent of Neo-Neon's overall sales last year, higher than the 2.7 per cent in 2003. The contribution increased to about 30 per cent of revenue in the first half of this year. Neo-Neon is tapping the equity market by selling 200 million shares with an indicative price of HK$5.50 to HK$6.90 each, according to its listing prospectus. The firm hopes to raise as much as HK$1.38 billion from its initial public offering. The company raised the price range by 7.8 per cent from HK$5.10 to HK$6.40 per share, taking advantage of the current appetite for IPOs. 'The international offering has been more than 10 times covered, thanks to the firm's leading position in the sector as well as the prospects for the global lighting industry,' said a source close to the offering. Investors are placing orders even though the company has decided to enlarge the offering, the source added. The retail offering will start today while trading in the shares will begin on December 15. About 32 per cent of the proceeds, or HK$422 million, will be used to finance expansion of production facilities with a 650,000 to 700,000 square metre plant. The plant is expected to come on stream at the end of 2009. About HK$283 million will be used to buy equipment and HK$130 million for research and development expenses. The remainder will go to general capital.