AKN wants to list subsidiary in Singapore

PENANG: AKN Technology Bhd wants to list its subsidiary Paramount Discovery Group (PDG) on the main board of the Singapore stock exchange to reposition itself as a key player in the glove industry.
Hwang DBS Investment Bank Bhd had been appointed adviser for the flotation, said AKN chief executive officer Ooi Boon Leong.
Bangi-based PDG supplies polymer chemical solutions to the glove industry and exports 30% of its production to Indonesia, China, Thailand and Sri Lanka.
PDG reported net profit of about RM20mil for the 15 months ended March 31. Given the growth of the glove industry, observers expect it to record after-tax profit of RM20mil to RM22mil for the financial year ending March 31, 2008.
Ooi said the proposed Singapore listing was in line with PDG's intention to expand overseas, which would require additional funding.
“The listing will unlock the full value for AKN shareholders, given its depressed market capitalisation,” he told StarBiz.
“According to Singapore-based financial analysts, the average PE (price/earnings) ratio in Singapore is 18 times. Even at a PE of 12, the indicative market value of PDG is about RM240mil to RM260mil.
“This compares with the present market capitalisation of the whole AKN of less than RM80mil,” he added.
AKN bought PDG for about RM90mil a year ago, when the lead frame business became too competitive. A weakening semiconductor demand in 2004/05 and a major fire at its Penang unit brought AKN to its knees.
As a result, its shares fell from around RM5 to below 50 sen recently.
“PDG’s glove polymer chemical solutions have helped AKN to rise like the fabled phoenix from the ashes,” he said.
Ooi said the group also wrote off and disposed of non-performing subsidiaries or those that had not been able to keep track with the increasingly competitive environment brought about by globalisation.
The disposals included Dragon Group’s operations in China and Hong Kong to Flextech Holdings, a Singapore-listed company, for part cash and part exchange for ASTI Holdings Ltd shares.
AKN is now a substantial shareholder of ASTI, which is involved in the trading of semiconductor components. AKN is liquidating several Dragon Group subsidiaries to generate about RM70mil in cash.
On the manufacturing support and services business, Ooi said the division had been profitable over the past two years despite increasing competition.