Nomura Securities placed out 36.2 million shares in power tool manufacturer Techtronic Industries yesterday (Thursday). The deal raised HK$602.8 million ($77 million) for the selling shareholder whose name remained undisclosed.
Pricing came at HK$16.625, representing a 5% discount to the stock's HK$17.5 close. Books were open for just one hour as the deal was sold on a first come, first served basis. A total of 25 accounts were filled.
The transaction equates to 5.5% of the company's outstanding share capital, about 8% of its freefloat and 16 days trading. The selling shareholder is said to have completed divested its entire holding.
Techtronic Industries is a company, which is increasingly catching the attention of Hong Kong's research community. Most analysts still have a buy recommendation on it despite the fact the stock is up 136% year-to-date. A number believe it will gain Hang Seng Index inclusion within the next couple of years should it continue on its current upwards trajectory. It presently ranks in the high 50's in terms of market capitalization.
Growth is being driven by a number of brand acquisitions and the company's switch from an OEM to ODM manufacturer. And despite the impact of SAR's and the Iraq war, it posted record revenues for the first six months of the year.
Year-on-year, revenues were up 22% to HK$4.8 billion. At the same time, gross margins expanded from 24.4% to 26.9% and net margins from 4.3% to 4.38% despite the acquisition of a lower margin business - Royal.
Analysts say it is currently trading on a p/e ratio of about 16 times 2003 earnings, mid way between the trading levels of a comparable such as Black & Decker and its major customer US group Home Depot.