Xidelang eyes primary listing in Hong Kong

Ironically, if the plans for a primary listing on the Hang Seng Index do go through, XDL could be delisted from Bursa Malaysia within the next 18 months.


KUALA LUMPUR: Xidelang Holdings Bhd (XDL), voted by Forbes magazine as one of the best-run companies under RM1 billion last year and listed on the Malaysian stock exchange, is planning for a primary listing on the Hong Kong stock exchange.

Ironically, if the plans for a primary listing on the Hang Seng Index do go through, XDL could be delisted from Bursa Malaysia within the next 18 months.

Bankers familiar with the matter said XDL would be signing a mandate letter with Dow-Capital, a financial advisory company in Hong Kong, to help facilitate the listing exercise.

“This is not a dual listing exercise as the advisers feel that dual listing will only dilute earnings and depress the stock price,” a source told Business Times.

It is learnt that once the Hong Kong primary listing status
is granted, the shareholders in Malaysia will be given a oneyear
window to transfer their shares to the Hong Kong exchange.

“The application of transfer can be done via the company by
minority shareholders. After one year, the Malaysian-listed
company will become a shelf company,” said the source.

The plan comes just months after XDL’s controlling stakeholder
Mark Ding Peng Peng told Business Times that he was disappointed with its market valuation in Malaysia.

In a January interview, Ding said as such, 2012 would be a critical year for XDL in terms of its long-term plans here.

Xidelang is China’s second largest maker of running and skateboard shoes but its sports apparel business has been growing at a rate of 60 per cent over the last three years.

For the financial year ended December 31,2011, XDL’s shoe business contributed RM225.79 million in sales. The sports apparel, accessories and equipment divisions contributed RM228.94
million in sales.

A quick check on XDL’s latest full-year results for 2011 shows that gross profit margin for sports shoes is about 25 per cent while the gross profit margin for sports apparel and accessories is 40 per cent.

XDL, which posted a pre-tax profit of RM117.5 million in 2011, currently trades at a price-toearnings (PE) ratio of about two times, while its bigger rival Anta Sports Products Ltd, which has
a primary listing in Hong Kong, trades at a PE ratio of about eight times.