Casino fit-out specialist Sundart designs HK$700m offering
Sundart International Holdings, which won big contracts fitting out the marble and crystal gambling palaces of Macau, is hoping Hong Kong investors will take a bet on its own prospects.
The interior decor and renovation company will sell shares in Hong Kong later this month. It plans to raise as much as HK$700 million on the main board to fund expansion on the mainland and the Middle East.
High-profile tycoons are believed to be lining up to buy the shares.
Sundart has ridden the casino boom over the past four years, fitting out the interiors of such landmark projects as MGM Grand Hotel, Grand Lisboa Hotel and Casino and Wynn Resort Macau.
The company had originally planned to raise between HK$300 million and HK$400 million from the initial public offering but, given the strong market conditions, has decided to increase that substantially.
'The market is in good shape and therefore the company can sell shares with a fair valuation,' said a source close to the offering.
'A couple of local tycoons have shown strong interest in this offering already.
'The company has established a strong network with most Hong Kong developers and that should be beneficial, given that they are keen to increase their exposure in the mainland property market over the next few years.'
Developers such as Cheung Kong (Holdings), Swire Group, Henderson Land Development and Sun Hung Kai Properties own a combined 45 million square metres of land on the mainland, according to ICBC International.
Sundart has maintained steady earnings over the past three financial years, and is forecast to achieve higher growth in the coming two years because of bigger sales contributions from its mainland business.
Earnings are projected to increase 44.4 per cent to HK$208 million next year, boosted by a higher profit margin from local property projects amid lower raw material and labour costs.
Although Hong Kong and Macau projects have contributed nearly 96.7 per cent of the company's revenue this year, Sundart is aiming to shift its business focus to the mainland and the Middle East in the next two years, taking advantage of strong demand for high-end decoration and renovation of both residential and commercial properties.
The company is expected to kick off an investment roadshow tomorrow. It will host a management luncheon with local investors next Monday.
The public offering is slated for the week of August 17, with trading scheduled to begin in the last week of the month.
ICBC is the bookrunner and sponsor of the offering.
Profit pipeline
Contribution of Hong Kong and Macau projects to Sundart's revenue this year: 96.7%
