VOLTAGE converter manufacturer All Pantronic Holdings will use about $12 million of proceeds from its $87 million share issue to finance a telecommunications manufacturing joint venture in China. The group owns a 60 per cent stake in the joint venture plant in Songgang, while the mainland partner, Baoan District Songgang County Economic Development, owns 40 per cent. Subject to approval by the Ministry of Posts and Telecommunications, the plant has the right to sell 10 per cent of its telecommunications products in China. All Pantronic is offering 68 million new shares at $1.28 each, with one free warrant for every five shares subscribed. The shares are pitched at a price-earnings multiple of 5.9 on a weighted average and 7.5 on a fully-diluted basis. The group forecasts a profit of at least $44 million for the year ended March 31, compared with $34.2 million in the previous year. Capitalised at $348.16 million, All Pantronic is backed by an adjusted net tangible asset of 58 cents a share. The prospective dividend yield is seven per cent. Chairman and co-founder Ho Che-kong said the company was also setting up a voltage converter joint-venture plant in Shenzhen to boost its overall production capacity. It would use about $10 million of the offering's proceeds to invest in the new plant, which might sell 30 per cent of products in China, he said. A further $10 million would go towards the addition of plastic and mould-making sections at existing production plants, he said. A further $8 million would be used to improve existing production lines, with the balance used as additional working capital. The company expects growing environmental awareness will result in increased demand for rechargeable products, which will subsequently fuel consumption of voltage converters. Besides voltage converters, All Pantronic intends to market electronic products under its own labels. As part of its expansion the group has recently struck deals to manufacture telephones for British firm Audio Line and television remote controls for Japan's Hitachi. Mr Ho said sales to the United States accounted for about 30 per cent of the company's turnover. He said withdrawal by the US of China's most-favoured nation status might have an effect on the company's sales but said the impact would not be significant. Europe is the company's biggest market, accounting for about 47 per cent of sales. Hong Kong-listed Starlight International Holdings will own a 25.5 per cent interest in All Pantronic after the share offering. Starlight is also a customer of the company. The share offering, sponsored by Sun Hung Kai International, opens today and closes on Thursday. Trading in the shares and warrants is expected to start on April 28.
