A Malaysia-based construction services company BGMC International Ltd is seeking to list on the Main Board of the Stock Exchange of Hong Kong.
Assuming the offer price was fixed at 75 cents per offer share, being the mid-point of the indicative range of the offer price and after deducting underwriting fees and total expenses the net proceeds raised would be HK$285.10mil.
BGMC provides a wide range of construction services and it is capable of undertaking public-private partnership (PPP) projects.
It said the projects are based on the build, lease, maintain and transfer (BLMT) model, allowing it to generate long-term recurring cashflow.
BGMC said it has a strong customer base including leading property developers and a government-linked company. Its customers include Sime Darby Group, Tenaga Nasional Berhad and MRCB.
It also pointed out that it had a proven financial track record where revenue, gross profit and net profit surged by compounded average growth rate of 46.7%, 147.3% and 200.7% respectively between FY2014 and FY2016
As for the dividend policy, BGMC said it would be no less than 30% of its distributable net profit annually, subject to the absolute discretion of the board and approval of the shareholders.
On the proceeds to be raised from the IPO, it said 65% would be for financing start-up, operation and implementation costs for prospective construction projects, 25% to purchase machinery and equipment , and the remaining 10% as working capital.
In the financial year ended Sept 30, 2016, it posted net profit of RM64.98mil on revenue of RM516.88mil. This was a sharp improvement from FY15 when it reported earnings of RM20.91mil on revenue of RM425.59mil. In the first half ended March 31, 2017, it posted earnings of RM31.55mil on the back of RM359.09mil.
Recall that in 2012, BGMC secured a BLMT to build the University Teknologi MARA (UiTM) campus in three years up to September 2015.
It would also provide asset management services for 20 years starting from November 2015. The UiTM campus will be transferred to the university when the concession period ends in 2035.
“The project is expected to generate long-term recurring cashflow for the group on a monthly basis. UiTM shall pay the group availability charges amounting to approximately RM48.1mil a year and expected maintenance charges of approximately RM10.1mil a year,” it said.
UiTM has its main campus in Selangor and it has 35 campuses and offers over 500 programmes to more than 165,000 students.
Tje Hong Kong public offering started at 9am on Monday and will end at noon on Thursday. The final offer price and allotment results will be announced the following week on Aug 8.
It added the dealing of the shares was expected to start on Aug 9 and they would be traded in board lots of 4,000 shares each.
Fortune Financial Capital Ltd is the sole sponsor while Fortune (HK) Securities Ltd is the sole global coordinator.
China Everbright Securities (HK) Ltd, Fortune (HK) Securities Ltd and Head & Shoulders Securities Ltd are joint bookrunners and joint lead managers of the listing.