By NG MIN SHEN
HONG KONG • The debut listing in Hong Kong of PRG Holdings Bhd’s manufacturing subsidiary, Furniweb Holdings Ltd, is expected to drive both growth and opportunities in China for the Malaysian company.
PRG group MD Datuk Lua Choon Hann said having a listed subsidiary on Hong Kong’s Growth Enterprise Market (GEM) will also increase the valuation of the group.
“Furniweb’s current valuation is about RM177 million which will boost the valuation of the parent company,” he told the press after Furniweb’s listing in Hong Kong yesterday.
Furniweb opened at a 20% premium over its offer price of HK$0.50 (27 sen) per share for the 126 million new shares being offered. PRG holds 75% of the entity after listing.
Lua said Furniweb’s listing will also allow more fundraising activities to inject into PRG’s property development and construction businesses.
“We will be able to raise more cash for the holding company because we have more credibility now and we’re holding 75% of a Hong Kong-listed vehicle,” he said.
PRG’s shares on Bursa Malaysia tracked the Hong Kong debut. Its shares opened one sen higher at RM1.02 yesterday and rose to a high of RM1.03 before dropping to RM1.01 at the midday break.
Furniweb CEO and ED Jimmy Cheah Eng Guan said despite the high cost of listing in Hong Kong, Asia’s third-largest stock market by value, provides exposure to more international investors.
“Hong Kong is a little bit more understanding, and we need the funds to grow,” he said.
The initial public offering is expected to raise a total of HK$63 million (approximately RM33 million) and was over-subscribed by over 162 times for the shares under the public offer.
The net proceeds after deduction of underwriting fees and other listing expenses stand at some HK$35.6 million, to be reinvested for Furniweb’s operations.
PRG deals mainly in property development, construction and manufacturing businesses.
Its manufacturing segment was its only profitable segment for its financial year ended Dec 31, 2016 (FY16).
The segment was also the main contributor to PRG’s improved revenue for both the first quarter ended March 30, 2017 (1Q17), and 2Q17.
Furniweb posted net earnings of RM6.67 million for FY16 on the back of RM97.94 million in revenue.
Excluding listing expenses, its net profit for FY16 amounted to RM9.07 million, while net profit margin excluding listing expenses was 9.3%.
The group is already eyeing a move to the Main Board of the Hong Kong Stock Exchange (HKSE), although it has yet to set a timeline for the promotion.
“The GEM board is the first step. We cannot be too ambitious. We have to build our fundamentals before looking at a higher target,” Lua stated.
Cheah said, while the Main Board is “always the ambition”, there is no timeframe set as the company has just been listed on the GEM board.
“There’s always the aim to get up to the Main Board. We will try, it will be a logical step and also a natural and strategic progression,” he said.
He also did not discount the possibility of expanding into China, noting that being listed in Hong Kong provides expo- sure to the highly sought-after mainland Chinese market.
“One of the reasons we’re here in Hong Kong is that there’s a window to China, so if there is an opportunity to synergise our technology and products, we will explore it,” Cheah said.