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FURNITURE maker Latitude Tree International Group has launched an initial public offer (IPO) to raise $6 million.
The Vietnam-based exporter of wooden furniture - a subsidiary of Malaysia- listed Latitude Tree Holdings - will place out 36 million shares at 22 cents each.
The company chose to list its Vietnam unit in Singapore partly because there seems to be 'no volume' in the Malaysian listing, said finance director Yeoh Joe Son.
Two-thirds of the funds will be used to upgrade and expand production facilities and extend warehousing.
The company is also looking to move into the original design manufacturer segment. It is currently an original equipment manufacturer.
Latitude - said to be the largest exporter of wooden furniture in Vietnam - has 90 per cent of its customers in the United States, said Mr Yeoh.
The company is keen to expand into other markets such as the Middle East, which offers higher profit margins of 15-30 per cent compared with the usual margins of 10-20 per cent, he added.
The remainder of the funds will be used for working capital purposes.
For the six months ended Dec 31, 2008, post-tax profit jumped to $5.1 million from $1.7 million a year ago, thanks partly to lower oil prices. Sales rose 18.2 per cent to $67.6 million from a year ago.
The issue price reflects a historical price-to-earnings ratio of about 4.8 times.
This is based on net earnings per share of 4.57 cents for the fiscal year ended June 30, 2008.
PrimePartners Corporate Finance is manager and sponsor of the IPO, while DMG & Partners Securities is placement agent. NRA Capital is the independent financial adviser.
Latitude's shares are expected to be listed and traded on Aug 19.
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