The recovery of global economy brings new hope for shoe enterprises, and a wave of listing booms again in the shoe industry. A large number of shoe enterprises rush to put listing on the top of agenda, trying to take advantage of the capital market and inject fresh blood into the company. The hot trend stands for the coming of a capital operation era, which will push the whole shoes industry into a comprehensive capital era.
Xidelang Holdings Limited (XDL, 5156, consumption production share on main board) had a grand listing on the Main Board of Bursa Malaysia Berhad, becoming the third Chinese sporting goods company landing on Malaysia. On the first day after listing, Xidelang’s share price rose by 8.62% from the offer price of 0.58 ringgit to 0.63 ringgit, with a turnover reaching 109,451,800 shares. Xidelang won the first battle for listing, which brought joyful atmosphere to Malaysian capital market and obtained large amounts of fund from the capital market, in favor of its future better development. Why did Xidelang choose Malaysia for the listing? According to the Executive Director and Chief Executive Officer Ding Pengpeng, it was in response to the trend of opening-up of Malaysian capital market. When he investigated in Malaysia, he won support from the Bursa Malaysia Berhad and Malaysian Securities Commission. And he found the Malaysian market to be steady and stable; therefore he wished Xidelang holdings Ltd. to grow together with Malaysian capital market.
Got into the Act and Won the First Battle:
According to Malaysian media, Xidelang went public on the main board with an opening price of 75 cents (1 ringgit = 100 cents), at a premium of 17 cents compared with the offer price of 58 cents, 29% up. Its share price began to rise by 32% to 76.5 cents, but it started to fall in the afternoon influenced by the macro consolidation, closing at 63 cents, at a premium of 5 cents, with a turnover reaching 109,451,800 shares.
According to Xidelang’s Executive Director and Chief Executive Officer Ding Pengpeng, the company earned 58,220,000 ringgit of net profit in the first three quarters this year, with a turnover of 307,850,000 ringgit. This year's net profit is expected to increase by more than 40%. After the successful listing, the company will continue to dedicate itself to improve the brand status of Xidelang and to expand production lines. As for the share price, Ding Pengpeng said it was reasonable and that he hoped investors could benefit from it.
Foreign media reported that Xidelang had obtained 1.42 times of over-subscription prior to the listing. The 10,000,000 shares open to the public for application received 1113 application forms, applying for 24,197,600 shares with a total value up to 14,034,608 ringgit, equivalent to 1.42 times of over-subscription.
In accordance with the initial public offering plan, the company offers 100,000,000 new shares, among which 10,000,000 shares are open to Malaysian citizens for application, and 90,000,000 shares are for private placement; the price of every new share is 0.1 U.S. dollars (about 0.34 ringgit) ,and the offer price is 0.58 ringgit. Due to over-subscription of the new shares open to the public for application, the company also offers 10,000,000 shares out of the 90,000,000 shares for private placement to the public for application. And the 80,000,000 shares for private placement are fully subscribed.
The Short-term Focus on Chinese Market:
According to a survey, Chinese shoes enjoy a global market share of 20% to 24%. Chinese people’s per capita demand of shoe is 1.6 pairs, expected to reach 2.3 pairs in 2012, while the current U.S. per capita demand is 7.6 pairs. Therefore, there is a huge consumption market in China with a large population of 1.3 billion. Xidelang has chosen to focus on Chinese market in the short-term and take advantage of it as a springboard for the international market.
Ding Pengpeng said the market share of Xidelang in China is 0.25%, with running shoes and skateboard shoes as the main products, targeting on the youth aged between 15 and 35. It is said that in China the population of this group has exceeded 390,000,000, whose influence should not be underestimated. Xidelang plans to upgrade some existing retail stores into concept stores, and to strengthen market development, with the aim to open no less than 200 retail stores in northeastern China by the end of 2010 in order to expand its market coverage in these districts.
Listing Is an Inevitable Choice:
We can learn from the introduction that Xidelang’s current turnover has been close to RMB 1 billion Yuan. "China has a population of 1.3 billion, and the potential of consumption grows rapidly. Although the current profit rate is only 28.6%, it is supposed to rise when the turnover reaches 1 billion RMB. Our market strategy will focus on brand enhancement and promotion,” said Ding Pengpeng at the Malaysian media briefing. Indeed, Xidelang has developed to such a level with a stable market base, so that listing is the inevitable choice for enterprises to develop. It is necessary to get substantial fund by operation of capital so as to improve the production capacity of shoe enterprises, to enhance product promotion, to improve channel construction, to increase the value of brand, to increase market share, and to improve comprehensive competitiveness. Xidelang’s successful listing in the Malaysian capital market inspires a lot of shoe enterprises preparing to go public. They all believe that Xidelang will continue to make inroads in this field, move forward with its rivals and create a new world of development for the shoe industry!