Sampo plans to list on China's stock exchange

Sampo Corp (聲寶), a leading Taiwanese producer of home appliances, plans to offer shares in its Chinese operations on China's stock exchange, paving the way for a possible capacity expansion, a company official said yesterday.

"We're planning to list shares of our Chinese units on overseas stock markets in tandem with the stable growth of those factories," Sampo spokesman Gary Chen (陳昭宙) said.

This will include three factories in China -- a refrigerator plant in Tianjin and two plants producing freezer components in Suzhou and Dongguan, Chen added.

These three plants contributed combined pre-tax earnings of 63 million yuan (NT$252 million) to its parent company on total sales of 1 billion yuan last year, according to Chen.

To smooth the share-offering process, Chen said, "Sampo will not rule out the possibility of forming a joint venture with a Chinese home appliances brand."

Selling yuan shares in China has become a new way for Taiwanese electronics manufacturers to expand their business while raising funds directly from the Chinese stock market.

Companies such as Hon Hai Precision Industry Co (鴻海精密) and local handset maker Dbtel Inc (大霸電子) said they are making a cautious assessment of this approach after the Zhejiang King Refrigeration Industry Co's (浙江國祥製冷) successful share sale in December last year. The Taiwanese-controlled air conditioner maker became the first overseas company to sell local-currency stock in China.

But compared to Sampo's resolve, Hon Hai and Dbtel have said that a similar share-listing arrangement does not form part of their short-term fundraising plans, and that they are only considering it as one of several possible scenarios.

While a Chinese-language newspaper reported that Sampo was scheduled to execute the share sales in China, or in Hong Kong, by next year at the latest, citing Sampo chairman Felix Chen (陳盛沺), Gary Chen dismissed the timeframe report, saying no specific timetable had been set.

Sampo's shares dropped NT$0.2, or 1.27 percent, to NT$15.6 on the TAIEX yesterday, but analysts said the proposed stock-listing plan will have a positive effect in the long run.

profitability

"The share-sale plans indicate that its Chinese units have returned to profitability," said Chen Yen-liang (陳彥良), an analyst at Yuanta Core Pacific Securities (元大京華).

Another analyst said the share offerings, if realized, will give Sampo an advantage to effectively finance its Chinese units when the ceiling of China-bound investment remains in place.

"It will be convenient for Sampo to create closer ties with its Chinese partners outside Taiwan," said Helen Chen (陳佩君), an analyst at Polaris Securities Group (寶來證券).

partnership

Sampo formed a strategic alliance with Haier Group Co (海爾), China's biggest vendor of home appliances, in 2002, in order to make inroads into the Chinese market. In addition, Felix Chen served as an independent director on the board of TCL Corp, China's second-largest home appliances and handset maker.

Sampo, which produces plasma display panel (PDP) televisions for Thomson SA of France and Gateway of the US, is likely to supply TCL with PDP sets after the French company joined a television venture with TCL.