IPO: Yoong Onn Corp Bhd ...Nov09

Home linen and bedding accessories manufacturer and retailer, Yoong Onn Corp Bhd (YOCB) will be set for a stronger overseas expansion trail after raising fresh capital from its initial public offering (IPO).

YOCB has 43 years experience in linen and cloths trading. Its products include bed and bath linens, pillows, comforters and curtains sold under 14 brands names, such as Jean Perry, Louis Casa, Genova, Diana and Cotonsoft.

The company is offering 25.17 million new ordinary shares of 50 sen each, at 88 sen a share, to raise around RM22.15 million in proceeds. Meanwhile, its existing shareholders has also offered for sale 25.23 million shares under the IPO exercise at a price of 88 sen per share.

Of the 25.17 million new shares, six million shares will be sold to the public through balloting, while 6.5 million shares will be allocated for sale to eligible directors and employees, and 12.67 million shares for private placement to selected investors.
The IPO and listing exercise are expected to complete by early next month.

Upon raising the proceeds from the listing exercise, YOCB will go on an expansion trail, which include strengthening its presence in smaller secondary markets locally and venture into new overseas markets.

YOCB is setting aside around RM6 million from the total IPO proceeds for its expansion purposes. At the moment, YOCB exports its products to over ten countries, including Singapore, Vietnam, Indonesia, Taiwan, Turkey and Australia.

Overseas sales contributed 21% of the company revenue for FY2009 ended June 30. Plans are in place to increase its overseas business contribution up to 50% of revenue with more aggressive overseas sales expansion. YOCB recorded RM130 million in revenue and net profit of RM13.9 million in FY09.

Part of the proceeds from the IPO would also be used for repayment of loans that would further lower the group's current gearing level of 0.1 time as at the end of June 2009.

Maintaining a low gearing level would give us leverage to borrow if there is a need to raise capital in the future.