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IPO - Sihuan Pharmaceutical
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StonePlus
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14-Mar-2007 22:18
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Sihuan Pharmaceutical, a leading pharmaceutical company in the field of cardiocerebral vascular drugs in the PRC, offers 120 million shares at 43 cents each on SGX Main Board SINGAPORE - 13 March 2007 - Sihuan Pharmaceutical Holdings Group Ltd. ("Sihuan" or the "Group"),a leading pharmaceutical company in the field of cardiocerebral vascular drugs in the People's Republic of China (the "PRC"), today announced its initial public offering ("IPO") of 120 million shares at S$0.43 each (the "Shares") in conjunction with its proposed listing on the Main Board of the SGX-ST. Daiwa Securities SMBC Singapore Limited is the Manager, Underwriter and Placement Agent for the proposed listing. The Invitation Of the 120 million shares offered, 5 million shares are available to the public for subscription while the remaining 115 million shares are for placement. The Invitation represents approximately 25.5% of Sihuan's enlarged share capital of 470 million shares. At 43 cents per share, Sihuan's IPO is priced at an estimated price earnings ratio of 9.0 times, based on the Group's estimated net earnings per share of 4.78 Singapore cents for FY2006. The IPO will close at 12.00 noon on 21 March 2007. Trading of Sihuan's shares, in board lots of 1,000 shares, is expected to commence on a "ready" basis on 23 March 2007. Use of Proceeds From the estimated net IPO proceeds of approximately S$38.0 million to be raised by the Group, [LIST] [*] approximately S$12.5 million will be used to continue its R&D activities and expand our product offering; [*] approximately S$4.0 million will be used to increase its distribution network and marketing activities; [*] approximately S$12.5 million will be used to increase its production capabilities;and [*] approximately S$9.0 million will be used for general working capital requirements. [/LIST] Corporate Profile With its headquarters in Haikou City, Hainan Province and a manufacturing facility in Beijing, Sihuan focuses on the research and development ("R&D"), production and/or sale of cardiocerebral vascular drugs, which are used to treat diseases affecting the brain, heart and blood vessels. Sihuan also undertakes the R&D, production and/or sale of non-cardiocerebral vascular drugs in different forms and dosages. In the nine months ended 30 September 2006, sales from cardiocerebral vascular drugs accounted for approximately 83.5% of total sales, with the rest generated from the sales of non-cardiocerebral vascular drugs. The Group's core product, Kelinao (Cinepazide Maleate Injection, 80mg), is the best-selling peripheral vasodilation drug in the PRC for treatment of cardiocerebral vascular diseases, according to statistics collated by the Development Centre of Science and Technology of Chinese Pharmaceutical Association in 2006. In the first nine months of FY2006, Kelinao's sales grew by 136.6% year-on-year to approximately RMB68.6 million, contributing 62.8% to the Group's sales. Sihuan is also the only manufacturer of cinepazide maleate, the raw medicine for Kelinao, with a 20-year patent protection that expires in 2024 for the synthesis method of cinepazide maleate, and a 6-year national administrative protection period by the State Food and Drug Administration, PRC (SFDA) that expires in 2008. During the national administrative protection period, the SFDA will not accept the registration application of any other cinepazide maleate product in injection form or any pharmaceutical product using cinepazide maleate as the raw medicine. At the helm of the Group are two qualified medical professionals - Dr Che Fengsheng, the Group's Executive Chairman and CEO who has a Master of Medicine (Neurology) from the Fourth Military Medical University, Xi'an City, PRC, and Dr Guo Weicheng, the Group's Executive Deputy Chairman who has a Master of Medicine (General Surgery) from the same university. Also on the board is Non-Executive Director Dr Zhang Jionglong, who was conferred the professional title of Chief Physician by the Shenzhen City Title Conferment peform Leadership Group in 1992. Taking charge of the Group's sales and marketing activities is Executive Director and Deputy General Manager (Sales and Marketing), Mr Meng Xianhui, who has more than eight years of experience in marketing, sales and distribution in the pharmaceutical industry. Said Dr Che: "As with the rest of the world, China is experiencing an increasing rate of cardiocerebral vascular disease due to an aging population, changes in dietary habits, a quicker pace of life and greater work pressure. All these factors lead to hypertension, high cholesterol, heart valve disease, stroke, and complications arising from diabetes." "Not only are these affecting people 65 years and older, we are seeing an increasing number of patients from the younger age group. As such, we expect the demand for cardiocerebral vascular drugs to continue on the uptrend," Dr Che added. The Group has established an R&D system to develop and acquire new technologies and products through multiple channels. Aside from its in-house R&D facilities in Haikou City and Beijing, Sihuan has joint collaborations with third party research institutions and pharmaceutical research companies such as the Academy of Military Medical Sciences (the People's Liberation Army), Hainan Youbang Fukang Drug Research Co., Ltd and Beijing Tuo Lin Pharmaceutical Technology Co., Ltd. The Group also has technology-acquisition agreements with third-party pharmaceutical research companies to carry out the R&D of products with good market potential. To provide strategic direction for the Group's R&D activities, Sihuan's Drug Evaluation Committee was formed in 2004 to assist the Group in evaluating and assessing the viability of R&D projects. The seven-member committee is chaired by Professor He Fuchu, a renowned researcher, and consists of other professors and experts in the medical or pharmaceutical industries, as well as three personnel from the Group. Sihuan has a large product pipeline, with more than 50 pharmaceutical products at various stages of R&D, most of which are new drugs. In addition, more than half of these are cardiocerebral vascular drugs and more than 10 of these cardiocerebral vascular drugs are Modern Chinese Medicines. Financial Highlights Fuelled by the demand for its products, Sihuan's revenue has grown from approximately RMB51.9 million in FY2003 to approximately RMB101.6 million in FY2005 whilst net profit grew from approximately RMB17.8 million to approximately RMB38.2 million. In the first nine months of FY2006, the Group's net profit surged 226.4% year-on-year to approximately RMB 58.7 million on the back of a 76.1% growth in revenue to approximately RMB109.3 million. The Directors also estimate that in FY2006, the Group will achieve sales of approximately RMB168.2 million, an increase of approximately 65.5% from FY2005, as well as profit after income tax of approximately RMB89.9 million, an increase of approximately 135.3% from a year ago. Awards and Certifications Over the years, Sihuan has received several industry and government accolades such as the State Torch Programme Certificate which was awarded by the Ministry of Science and Technology of the PRC in 2006, as well as the Certificate of Well-known Trademark of Hainan Province from the Hainan Administration for Industry and Commerce, and The Outstanding Private Enterprise of Hainan Province from the Hainan Provincial Development and Reform Department, Department of Commerce of Hainan Province and Entrepreneurs Association of Hainan Province. Growth Strategy Going forward, Sihuan aims to be one of the most competitive and medically advanced pharmaceutical companies specialised in the area of cardiocerebral vascular drugs, especially those based on natural drugs via a four-pronged strategy. The Group will continue to enhance its in-house R&D capabilities, form more collaborations with renowned research partners to develop more new drugs, or new administrative forms of existing products, as well as develop generic drugs with good market potential. "Our R&D system will keep our pipeline of new products flowing, and we intend to expand our product range and introduce at least five new pharmaceutical products annually for the next three years," said Dr Che. On the operations level, the Group aims to increase its distribution network to approximately 6,000 hospitals in the next three years in the PRC, and expand into foreign markets such as the United States, Japan, Korea and Europe. Sihuan currently supplies its products to approximately 2,800 hospitals and medical institutions spread across 30 provinces, autonomous regions and municipalities in the PRC. The Group also plans to increase its production capabilities by acquiring additional equipment, constructing an additional production line for the manufacturer of lyophilised powder for injection products, and acquiring complementary facilities of other pharmaceutical companies. |
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