Chemspec International (CPC) wowed Wall St. yesterday by pricing at the top of its range at $9 per share. The China-based company is a contract manufacturer of specialty chemicals.
Business Overview (from prospectus)
We are a leading China-based contract manufacturer of highly engineered specialty chemicals. In particular, we are the largest manufacturer of fluorinated specialty chemicals in China based on sales with a share of approximately 21% and 25% of the Chinese market in 2007 and 2008, respectively, according to a commissioned report prepared by Frost & Sullivan. We manufacture specialty chemicals, which are typically highly engineered chemicals used as building blocks in the manufacture of more advanced chemicals or to enhance the performance of the end products manufactured by our end users in various industries including electronics, pharmaceuticals and agrochemicals. In manufacturing specialty chemicals for our customers, we also provide process design and process development services, which enable efficient and rapid production of specialty chemicals that are incorporated into our end users’ own products, thereby enhancing the value of our customers’ end products. We believe that our highly experienced management and research and development capabilities, our ability to rapidly respond to new customer processing specifications and requirements, and our long-term cooperative relationships with our major customers distinguish us from many contract manufacturers of chemicals and that the need to develop some or all of these attributes to be competitive effectively creates barriers to entry into the fields in which we operate. With our four flexible and responsive manufacturing facilities, we are equipped to produce specialty chemicals in both small batches for development stage projects and in large-scale amounts for commercialized projects, according to our customers’ needs.
Offering: 8.1 million shares at $9 per share on June 23 2009. Net proceeds of approximately US$43.7 million will be used to fund the expansion of the company's manufacturing capacity.
Lead Underwriters: Credit Suisse, Citi, Oppenheimer & Co.
Our sales increased by 22.7% from RMB163.2 million in the three months ended March 31, 2008 to RMB200.3 million (US$29.3 million) in the three months ended March 31, 2009...Our cost of sales increased significantly by 30.9% from RMB95.0 million in the three months ended March 31, 2008 to RMB124.4 million (US$18.2 million) in the three months ended March 31, 2009 due primarily to (i) costs associated with the overall increase in the volume of products sold, which resulted in increases in raw material, labor and other costs and (ii) other factors such as additional depreciation resulting from the acquisition of equipment used in the production of our products...As a result of the foregoing, our gross profit increased 11.4% from RMB68.1 million in the three months ended March 31, 2008 to RMB75.9 million (US$11.1 million) in the three months ended March 31, 2009, while our overall gross profit margin decreased from 41.8% to 37.9%, respectively.
We compete against a number of Chinese specialty chemicals producers, such as Wuxi Pharmatech Co., Ltd., Asymchem Laboratories Co., Ltd. and Zhejiang Yongtai Chemical Co., Ltd., and foreign specialty chemicals producers, such as Lonza Group Ltd., Evonik Degussa GmbH, Balchem Corporation (BCPC), Rohm and Haas Company (ROM), and Sigma-Aldrich Corporation (SIAL).
- Company website
- Seeking Alpha: 'Review of Three China IPOs'
- MarketWatch: 'Chemspec prices IPO'
- Xinhua: 'Chinese companies launch first IPOs on NYSE in 2009'