Trans-China Automotive Holdings (TCA), an automobile dealership group with operations in China, has launched its initial public offering (IPO) on the Catalist board of the Singapore Exchange (SGX) on Nov 1.
Headquartered in Hong Kong and Shenzhen, TCA was incorporated in 2015 and is in the business of distributing premium and ultra-premium automobiles under the BMW, McLaren and Lotus brands. The Group’s dealerships are located in key cities in the PRC namely, Foshan, Shenzhen, Guangzhou, Chongqing, Changsha and Wuhan. Its two main business segments are the sale of automobiles and the provision of after-sales services.
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To facilitate the sales of new automobiles, the group also sells pre-owned automobiles that come mainly from customer trade-ins, auction companies and other suppliers of used cars and are not limited to the brands it carries. As an ancillary business, TCA provides automobile agency services to its customers which include referrals for automobile financing, referral for insurance and car registration agency services where the group receives referral fees.
TCA provides after-sales services including repairs and scheduled servicing, maintenance and inspection of automobiles. The group also retails automobile parts and accessories and merchandise that feature the brands it carries.
In its latest FY2020 ended December, TCA recorded an 11.8% y-o-y increase in revenue to RMB4.2 billion, with the sales of automobiles segment contributing 87.9% of total revenue, while the remaining 12.1% was contributed by its provision of after-sales segment. In tandem with the higher revenue, gross profit rose 10.8% y-o-y to RMB316.1 million, while net profit expanded more than four times to RMB109.9 million in FY2020.
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The group has managed to carry this growth momentum to 1QFY2021, with revenue almost doubling during the first quarter to RMB1.3 billion y-o-y, while gross profit increased by 92.8% y-o-y to RMB113.0 million, thanks to higher gross profit margins from sales of automobiles. Net profit for 1QFY2021 surged 1,514% y-o-y to RMB46.8 million.
Francis Tjia, founder, executive director, executive chairman and CEO, says, “Our performance in FY2020 and even in 1Q2021 attests to the resilience of our business and given the robust conditions in our markets and industry, we are optimistic that we can continue this growth trajectory with the implementation and execution of our business strategies.”
With this IPO, TCA will become the first automobile dealership group with operations in the PRC to list on SGX. Other automobile dealership groups listed on SGX include Singapore-based EuroSports, Malaysia-based MeGroup and Jardine Cycle & Carriage with presence across the region.
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The Invitation is in respect of 85.0 million invitation shares at 23 cents per share, comprising 2.9 million invitation shares by way of public offer and 82.1 million invitation shares by way of placement. The invitation is expected to raise net proceeds of about $16.3 million.
The invitation represents approximately 14.55% of the enlarged share capital of 584,323,950 shares of TCA and based on the invitation price, the group’s market capitalisation will be approximately $134.4 million post-invitation.
The invitation will close at 12.00pm on Nov 9, 2021 and the listing and trading of TCA’s shares is expected to commence on a ready basis at 9.00am on Nov 11, 2021.
RHT Capital is the issue manager and full sponsor, while UOB Kay Hian is the underwriter and placement agent for this IPO.
“We believe that this is the right time for TCA to embark on its next chapter of growth. Over the years, our group has amassed extensive industry experience and expertise and has built a strong reputation among our business partners BMW and McLaren, who trust us to uphold their brand values and sales performance, and also among our customers, who rely on us to take care of their long-term automotive needs,” says Tjia.
“These factors, together with our team of experienced and dedicated employees, give us the confidence to move forward with the expansion of our operations. The funds raised through this IPO will enable us to fulfil our business strategies and future plans,” he adds.
TCA plans to use the net proceeds of $16.3 million raised in the IPO to expand the breadth and depth of its business. “We are confident of the prospects and outlook for our business. The PRC continues to experience rapid economic growth and rising affluence is driving a high propensity for consumption in key cities and this has led to robust demand for premium and ultra-premium automobile brands such as BMW and McLaren,” says Tjia.
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On the outlook, the group expects revenues from new automobile sales to increase due to an anticipated increase in demand for premium and ultra-premium automobiles in conjunction with the release of new BMW models in China and for revenues for after-sales services to increase in tandem.
Photo: Trans-China Automotive
