KStar ... Nov10

K-Star Sports Ltd's wholly owned subsidiary Fujian Jinjiang Dixing Shoes Plastics Co Ltd is expanding its footprint in China by setting up six new wholesale outlets in northern China.

The company started developing the northern China market in the middle of 2010. As at end-October 2010, K-Star had set up 19 wholesale points, of which six were in Urumqi in Xinjiang province and the remaining in Russia.

In China, Urumqi acts as a major export market as it is situated near neighbouring countries like Russia, Kazakhstan and the Middle East countries. The six outlets in Urumqi are K-Star's first wholesale points within China.

K-Star, via Fujian Jinjiang, designs, manufactures and distributes athletic shoes under its own Dixing and K-Star brands.

The shoes are distributed in China, Russia, Ukraine, Belarus, the Czech Republic, Poland, Romania, Finland and Hungary.

Meanwhile, outdoor wear company Xinquan International Sports Bhd reported its first quarter to Sept 30 revenue was up 32.3% to RM169.04mil while net profit was up 20.51% to RM25.85mil. It attributed the better numbers to increased sales of shoe soles and outdoor sports and leisure product.

K-Star Sports Limited plans to issue up to 75.6 million new shares under its proposed sponsorship of a Depository Receipts Programme (DRP) in Taiwan, raising about RM77.87 million based on the indicative issue price of RM1.03 per share.

It plans to use RM19.5 million to expand its production capacity, RM15.0 million for expansion of its sales and marketing network, RM9.0 million to continue to boost the company’s branding and advertising efforts and RM3.0 million to enhance product design and development
capabilities.

The balance is allocated for general working capital and expected expenses for the proposed Taiwan Depository Receipts (TDR) programme and the proposed share issuance.

Another portion of up to 24.4 million shares under the TDR programme would be existing K-Star shares offered for sale by certain existing shareholders of the company.

The issuance of the TDRs is equivalent to approximately 29.24 per cent of its enlarged issued and paid-up share capital.
The dual listing, would also help promote public awareness towards the company in Taiwan, strengthen its international brand image and provide an alternative source of funding for it.

The TDRs will be offered to potential investors in Taiwan by way of placement to identified third party investors and will be offered to the investing public in the country. The proportion of TDRs to be offered by way of placement and public subscription will be finalised prior to the issuance of the prospectus for the offering of TDRs in Taiwan.

K-Star has expanded its footprint in China and Russia and has successfully set up 19 wholesale points, of which six are new outlets located in Urumqi, in China's Xinjiang province, and the remaining in Russia.

K-Star currently has overseas distribution networks in Russia and Eastern European countries including Finland, Ukraine, Belarus, Poland, Finland, Romania, Hungary and the Czech Republic, among others.

Fujian Jinjiang Dixing Shoes Plastics Co., Ltd, the wholly-owned subsidiary of K-Star, currently generates over 700 designs annually and manufactures approximately 7.9 million pairs of quality sports footwear.

Of these, 4.3 million pairs were distributed to the company's retail outlets in China, 2009.