China Taisan to raise funds in Taiwan for expansion

07 Aug '10

4 min read

SGX Mainboard-listed China Taisan Technology Group Holdings Limited, one of the leading producers of knitted performance fabrics in the PRC, submitted an application to the Taiwan Stock Exchange and the Taiwan Central Bank for the offering and listing of up to 125 million Taiwan Depository Receipts, equivalent to 250 million shares, on the TSE based on a proposed ratio of each TDR representing 2 ordinary shares of the Company.

The TDR issue includes up to 125 million new ordinary shares to be issued by the Company, and up to 125 million vendor shares from the Group's Non-Executive Chairman and Substantial Shareholder, Mr Choi Cheung Kong or his nominee.

Better valuation and liquidity
Mr Lin Wen Chang, CEO of China Taisan, said, “We expect the TDR listing to bring about a new perspective to the valuation and liquidity of our shares, given the high PE ratios and healthy daily trading volumes of the TSE, and our strong management and research connections in Taiwan.

Initial ground checks in Taiwan indicate strong demand from the investment community and as such using vendor shares will keep dilution to minimum. If the TDR listing is successful, we intend to utilize the funds to spur our next phase of growth and ultimately bring more value to our shareholders.”

Textile companies listed on the TSE generally have higher valuations compared to peers in Hong Kong and Singapore. There are currently 36 textile companies listed on the TSE with an average PE ratio of 23.5 times1, compared to a PE ratio of 8.6 times1 in Hong Kong and 5.8 times1 in Singapore. As one of the largest stock exchanges in Asia, the TSE also has the healthy daily trading volumes with a 30-day average volume/equity float of 0.74%1, compared to that of 0.61%1 in Hong Kong and 0.34%1 in Singapore.

Another reason for China Taisan to seek TDR listing is its strong connections to Taiwan. The Group has a team of experienced Taiwanese who are involved in key roles in the production and R&D departments. Among such Taiwanese employees are Mr Lin Wen Chang (CEO), Mr Lin Yung Hsiang (Head of Sales and Marketing) and Mr Tseng Ching An (General Factory Manager).

The Group also engages Professor Yeh Jen Taut as the technical advisor of the Company who is also the textile sector head of the Taiwan National Science Committee. The Company has achieved its products breakthrough by collaborating with the Taiwan's Industrial Technology Research Institute.

Capacity Expansion
China Taisan plans to use the listing proceeds to fund its capacity expansion. The Group has recently applied to acquire a new piece of land in Jinjiang City which is intended for the purpose of expanding production capacity. The management intends to construct a new factory on the new land which is just a 2 minutes drive from the present location of the Group's production facilities.

Lin Wen Chang added “In light of the ongoing recovery of textile sector, strong order book from our downstream customers, and high utilization of our plant, we need to expand our production facility quickly to take advantage of the increased demand.”

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