Wilmar plans to list 10 percent of YKA on ChiNext

Hong Kong money-changer with yuan symbol signHong Kong money-changer with yuan symbol sign. Photo taken pre-Covid

Wilmar said Tuesday it planned to list a 10 percent stake in its China operations, Yihai Kerry Arawana Holdings, or YKA, on the ChiNext board of the Shenzhen Stock Exchange.

The IPO will enable Wilmar to accelerate its growth in China, the world’s largest consumer food market and unlock shareholder value, the agri-business said in a filing to SGX.

“In China, the group has more than 300 plants in 62 locations with many top brands and a vast marketing and distribution network. We believe such an operation is not easily replicated and will cost significantly more to build today,” Kuok Khoon Hong, chairman and CEO of Wilmar, said in the statement.

The proceeds will be used to fund YKA’s capital expenditure over the next few years, Wilmar said.

“With an established history in China of over 30 years, YKA is well positioned to further extend its market leadership and positioning in China’s growing food sector,” Wilmar said.

In 2018, YKA had a 39.8 percent market share by sales volume in China for the packaged edible vegetable oil sector, a 17.9 percent market share for packaged rice and a 26.5 percent market share for packaged flour, Wilmar said.

YKA has a strong track record of growth, with a 154.2 percent compound annual growth rate (CAGR) for net profit over 2016-2018, hwile overall topline sales had an 11.9 percent CAGR over the same period, Wilmar said.

For the first quarter of 2019, YKA posted net profit of 831 million yuan (S$163.23 million or US$117.98 million) on revenue of 40.35 billion yuan.

Wilmar currently holds 99.99 percent of YKA, while Shanghai Broad Ocean Investment holds 0.01 percent, while after the IPO, Wilmar will keep 89.99 percent and Shanghai Broad Ocean will maintain its stake, the filing said.

The timeline for the listing is subject to approval from Chinese regulators for the listing and other regulatory approvals, Wilmar said.

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