Comprehensive M&A data with integrated detailed company information

Tongda to spin-off, list household and sports goods arm
Posted on Thursday, 19 September 2019 13:21
A spin-off and separate listing are on the cards for Tongda Group Holdings’ subsidiary that is responsible for the manufacture of durable household goods, utensils and sports and healthcare products for European and American mega-size brands.

Tongda Xiamen Smart Technology is expected to apply for an initial public offering - comprising the issue of new A-shares - on Shenzhen’s ChiNext board in the first half of 2020.

Its parent has already got the ball rolling on the proposed spin-off by submitting paper work for the proposal and receiving a green light from the Shenzhen Stock Exchange last week.

However, any such separation and subsequent listing would be conditional on approval of the China Securities Regulatory Commission and the bourse.

Tongda is touted as a world-leading supplier of high-precision structures for smart mobile communications and consumer electronic products across categories like automotive, home appliances and set-top boxes.

In its report for the six months ended 30th June 2019, the company noted the overall economy and handset market are expected to remain challenging.

The group’s custom base currently consists of six of the largest global mobile brands and it has already received a large amount of orders from Samsung last year.

Ideally, this means Tongda has “strong support to enlarge market share and disperse risks from a clientele that was overly concentrated”.

Furthermore, the rollout of 5G in the second half of 2019 is expected to open up opportunities for growth and a chance to corner this sector.

Tongda did not mention in its H1 report what kind of prospects its household and sports goods segment would have but did note it may consider ways to further develop the division.

In its statement yesterday, the group said a spin-off would “enable investors and financiers to appraise the strategies, functional exposure, risks and returns” of the two businesses on a standalone basis that would reflect their true market value.

© Zephus Ltd