Global Sweeteners Holdings Ltd (大成糖業), one of China’s major corn sweetener makers, said yesterday it would use funds raised via its Taiwan Depository Receipts (TDR) issuance to expand its cattle fattening business.
“Funds from the TDR will be mainly used to expand our cattle fattening business, which is a new growth engine for the company,” Global Sweeteners chairman Kong Zhanpeng (孔展鵬) said at an investor conference.
The Hong Kong-listed company is aiming to diversify its business portfolio by offering more agriculture-related products, as such products are daily necessities, he said. Corn sweeteners are widely used in food and beverages, drugs and cosmetic products, among others.
The company extended into the cow fattening sector early last year by using protein and fiber extracted from corn to fatten the cows for three to six months before sending them to butchering houses, Kong said.
Global Sweeteners aims to butcher 58,000 cattle this year, which would generate HK$570 million (US$70 million) in revenues, a more than fivefold increase from this year’s 11,000 cattle, with projected sales of HK$100 million, it said.
The company differentiates itself from competitors as it manages the whole supply chain under one roof — from corn extraction, to the production of corn sweeteners and cattle feeds — Kong said, adding that this enables it to enjoy much lower production costs.
Listed in Hong Kong in 2007, Global Sweeteners commands 15.4 percent of the Chinese starch sweetener’s market, the listing document from underwriter Horizon Securities Co (宏遠證券) said.
“There has been a supply shortage for sweeteners in recent years, affected by global warming and drought in certain provinces in China. Prices for sweeteners are expected to continue hovering at a higher level,” the document said.
The company’s output of corn sweeteners is expected to grow 20 percent to 1.5 million tonnes this year, with beef products to fuel future business growth, the securities firm said, setting Global Sweeteners’ TDR target price at NT$24.60 (US$0.80), or HK$3, per share.
Global Sweeteners is set to start trading its TDR on the Taiwan Stock Exchange tomorrow at NT$15.5 per unit, a 9 percent discount of its yesterday closing price of HK$2.08 in Hong Kong. One TDR is equivalent to two shares.
The company received subscriptions for 10.6 times the 8.5 million TDRs it offered to the public.
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