China Star Food Group made an impressive debut on its first day of trading on the Catalist board yesterday.
The stock opened at 23 cents and ended the day 26 per cent higher at 29 cents with about 24.59 million shares changing hands.
The Chinese firm, which makes sweet potato snacks, listed on the secondary board of the Singapore Exchange (SGX) after completing a $168 million reverse takeover of cash company Brooke Asia last September. It also issued a placement of 25.25 million shares at 23 cents each to increase its public float.
Remisier Alvin Yong said that the good first day showing was possibly due to the timing of its listing.
"This has been a positive week for the Asian markets, so it benefited from the positive market sentiments."
Given that retail investors were not able to take part in the placement exercise, there could also be some interest from these investors, he said.
China Star executive chairman and chief executive Liang Chengwang told The Straits Times: "We hope to use Singapore as a platform to sell our sweet potato products outside of China."
Founded in 2009, the Fujian-based company sells its snacks through a network of more than 300 distributors and wholesalers across China.
It posted revenue of 418.9 million yuan (S$86.8 million) last year and had a compounded annual revenue growth of 51.5 per cent in the four years between 2012 and 2015, according to the company. The listing here will help it raise funds to develop even faster, said Mr Liang.
About a quarter of the $5.8 million raised in the placement exercise will be used to buy machinery and equipment for a third factory, which will be operating in the fourth quarter. A fourth factory, which is expected to increase the overall production capacity significantly, is scheduled for completion next year.
Mr Mohamed Nasser Ismail, the SGX's head of equity capital market and capital market development, said: "Given the size of China's consumer market coupled with the company's focus on food quality and safety, China Star Food will ride on the market's growth prospects, underpinned by an increasingly affluent middle class that demands healthier snack options."
He noted that the listing comes with detachable warrants, giving shareholders who participated in the initial public offering an option to increase their holding within two years of the market debut.
Chong Koh Ping