EN ROUTE TO LISTING: 20 per cent of net profit will go to investors for this year and next
CHINA Automobile Parts Holdings Ltd (CAP), a China-based firm en route to a listing on Bursa Malaysia's Main Market, intends to pay out a fifth of its net profit to investors as dividends in each of its first two years of listing.
"That's our dividend policy for 2013 and 2014 - 20 per cent of profit after tax. Moving forward, the rate will be determined by the board. It's too long term to decide now," its managing director Terry Li told Business Times in an interview yesterday.
CAP's net profit stood at RM62.9 million for the year ended December 31 2011, having grown by 40 per cent over the previous two years. Revenue in that period grew by 49 per cent to RM287.1 million.
Li anticipates "reasonable" profit growth over the next few years.
CAP's prospectus is due to be out tomorrow and its tentative date of listing is January 30.
It joins a growing list of China-based companies in recent years that have sought a listing in Malaysia.
There are currently eight such companies on Bursa Malaysia, including XiDeLang Holdings Ltd and Multi Sports Holdings Ltd.
CAP makes replacement parts for commercial vehicles, particularly trucks, out of its sole production centre in the Fujian province.
It sells five categories of products namely wheel-hub bolts, wheel axles, steel pins, u-bolts, and torque-rod bushings - and has seven patents registered in China.
According to Li, 65 per cent of its sales are derived from China, while the rest come from Southeast Asia and the Middle East.
Going forward, he expects an even bigger percentage of sales to come from China, given huge potential in that country.
"There's no direct competitor in China. We have distributors in 17 provinces and are looking to expand to a few more places like inner Mongolia, Ningxia, Gangsu and Xinjiang by the end of this year," he said.
At the same time, it also wants to enter new markets outside China.
CAP's initial public offering (IPO) involves the issuance of 90 million new shares and an offer for sale by its promoters of 60 million existing shares at an indicative price of 68 sen each.
Of the 90 million new shares, 30 million are for the Malaysian public, while the rest will be privately placed out to high net-worth individuals and institutions from both Malaysia and China.
Li said part of the RM61.2 million raised from the IPO will be used to finance the expansion of its pro-duction centre and increase production capacity.
Post-listing, the company's two biggest shareholders - investment holding firm CAP (BVI) Co Ltd and GuoTai International Holding Ltd, which now have a 75.7 per cent and 12.5 per cent stake respectively in the company - will hold a combined 65 per cent stake.
CAP's chairman will be Datuk Seri Jalaluddin Abdul Rahim, who is also the deputy chairman of Lingui Developments Bhd and chairman of Pacific & Orient Insurance Bhd.