Be Top gives RM59m guarantee in Sinotop RTO

China-based fabric manufacturer Be Top Group Ltd, which is undertaking a reverse takeover (RTO) of Sinotop Holdings Bhd, has provided a profit guarantee of no less than 125 million yuan (RM59.47 million) for the financial year ending Dec 31, 2010.

Sinotop executive director Jackson Ho said yesterday the profit guarantee was to assure the current shareholders to subscribe for the renounceable rights issue of 10 new Sinotop shares for every share held.

The RTO by Be Top not only served to create value for shareholders but also made the Malaysian entity the listed vehicle for the China company, unlike recent listing exercises undertaken by other China-based companies, he said at a press conference.

Sinotop’s rights issue will see the company’s share base enlarge by between 945.98 million shares under the minimum scenario and 1.18 billion shares under the maximum scenario, he said.

Ho expected the rights shares, at an issue price of 20 sen per share, would raise between RM27 million (based on 135 million rights shares) and RM61.42 million (307.08 million rights shares).

The rationale would provide shareholders with an opportunity to reinvest in new core business, expansion and for future development.

Ho added that the 125 million yuan was a 25% increase over the net profit for FY09.

The abridged prospectus for the rights issue would be released on Monday, Ho said.

He also said the proposed injection of Be Top into Sinotop would create additional shareholders’ value and provide Sinotop shareholders with an opportunity to participate in China’s exciting textile industry.

In FY09, Be Top made a net profit of 100.36 million yuan on the back of 595.68 million yuan revenue, which was marginally higher than its targeted 100 million yuan.

Ho said the company’s earnings will be driven by China’s growing appetite for fabric, which is a consequence of its higher gross domestic product (GDP) of over US$3,000 (RM9,690) per capita, growing annual disposable income, burgeoning population and change in consumption trends towards quality fabrics.

The company is a midstream player in the Chinese textile industry, where it is involved in looming, knitting and weaving cotton textiles. Sinotop was formerly John Master Industries Bhd, which was also involved in the garment industry.


Written by Kay 
The Edge Malaysia