Wednesday, November 29, 2006

Sweet Symphony

China Lifestyle Food And Beverages Group (SIN:E69) has entered into a share placement arrangement with broker-dealer UOB Kay Hian. The latter will help place up to 70 million shares at S$0.38 each on a best endeavours basis. This placement price is about 9% lower than the current market price of S$0.415. The placement is of a fairly large size; representing about 16% of its current share capital. As a result, the new share capital will be enlarged to 495 million shares (from 425 million).

The net proceeds raised, approximately S$25.8 mil, will be used for three purposes. They are for (a) developing a production facility in Tianjin, (b)purchasing new product lines and (c) working capital for their joint venture with Super Coffeemix.

With this placement, China Lifestyle hopes to embark on expansion plans to strengthen its market position. In view of this, investors can look forward to accelerated earnings growth in the near future. This may also bring sweet dividend payouts as China Lifestyle are committed to paying out 20% of its net profit as dividends from FY2006 to FY2008. Does this sound like sweet music to your ears?



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