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Deja Vu: Great Group Executive Chairman Weng Wenwei (second from right) gongs in the undergarment maker's Singapore IPO in 2009. The S-chip is planning to dual list in London.
Photo: Great Group


THERE ARE SOME things in life that we simply can’t go without, in good times and in bad.

Undergarments - they are as close as anything in the menswear and women’s wear departments can be to achieving “recession resistant” status.

That is why undergarment maker Great Group Holdings Ltd (SGX: GGH) is confident going forward, and it’s one of the driving forces behind its decision to seek a secondary listing on the London Stock Exchange (LSE).

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"We believe now is the right time for a dual listing," says Great Group Executive Chairman Weng Wenwei.  Photo: Andrew Vanburen

“We listed in Singapore two years ago (September 2009) and we believe now is the right time for a dual listing.

"We’ve developed plenty of foreign contacts over this time and London makes sense for us now,” Executive Chairman Weng Wenwei told NextInsight.

Great Group is targeting to issue as many as 42 mln new shares on the LSE, which will increase its issued share capital base from 265 mln shares now by nearly 16% to upwards of 307 mln.

Mr. Weng said that the company considered Hong Kong -- one of the favorite capital market choices for a recent spate of S-chips either seeking a dual listing or a complete withdrawal from Singapore – as a possibility for fund raising.

“We are keen to develop in different markets and expand or investor base and the sourcing of our capital. But we are still a relatively small-scale firm and are not quite ready for Hong Kong,” Mr. Weng added.

Mr. Weng -- the controlling shareholder -- also intends to place up to 18 mln vendor shares to investors, provided investor demand exceeds the 42 mln new shares offered.

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Great Group Executive Chairman Weng Wenwei, left, giving investors a tour in Quanzhou.  Photo: Andrew Vanburen

If the vendor shares are fully taken up, Mr. Weng’s equity stake will be reduced from 68.5% currently to 53.3%.

He said London was Great Group’s best option at this point in its development.

“As we want to rapidly develop our brand recognition, and because many of our key customers are in Europe, this new listing will boost our market share and diversify our investor base.

“We also believe the move will help our self-branded GRAT.UNIC export sales to the region. More orders will result from our LSE listing.”

However, he didn’t anticipate any copycat competition from domestic peers anytime soon.

“Our sector (men’s undergarments) is still very fragmented in China and there is nothing close to a monopoly by any one player. Therefore there are few if any local rivals who have the size and capability to go public at all, let alone seek a dual listing.”

He said he fully expected the upcoming dual listing proposal to be approved during an extraordinary general meeting.

And once the anticipated funds came flowing in from the new listing, Great Group would use them to its full advantage.

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Seams Pretty Good: Great Group's workers sewing away in Quanzhou.  NextInsight file photo

“We plan to utilize the proceeds primarily for two purposes: expand existing capacity and broaden our own-brand recognition and sales.”

Great Group said about 50% of the net proceeds will be used to boost capacity; 30% for marketing; and the remainder to expand trading business and for general working capital purposes.

He added that following the expected listing on the LSE, Great Group was well-equipped to deal with any differences in consumer preferences in diverse markets.

“We are very flexible and versatile, and are used to patterning our products to meet specific client demands. Therefore we are confident we can meet consumer needs, regardless of where they are,” Mr. Weng said.

A final go-ahead for the placement is subject to compliance with SGX regulations, approval from the UK Listing Authority and the LSE itself, and approval of Great Group shareholders at the EGM.

When Great Group recently announced its intentions to dual list, Mr. Weng said: "Great Group is poised to benefit from an increasing trend to outsource garment manufacturing to China at a time when we are expanding our production capacity, increasing our design capability, enhancing efficiency and developing our own brand presence within China.

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The Bottom Line: Great Group is targeting the higher-end undergarment market. Photo: Company

"We welcome the approval-in-principle by the SGX of our dual listing on the LSE which will widen our investor base and make the group more attractive to potential investors in Europe, where our largest customers come from, augmenting our future growth in this geography.

"The dual listing will also raise our corporate profile as we grow our global presence, and allow us to tap capital for future expansion,” he added.

He said the global garment sector is at a “major inflexion point” with increasing outsourcing trends taking place against a backdrop of rising wages in China, higher raw material costs and a weakening US Dollar -- the currency in which most export sales is denominated.

This confluence of factors has led Great Group to move up the value chain, using the newly constructed 60,000-square-metre facility in the Jiangnan Hi-Tech Information Industry Zone as a catalyst to introduce changes in management practices.

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Great's recent price: 0.18 sgd

“Apart from greater efficiency and more design elements, the group is also offering a wider range of products beyond undergarments (until recently its chief product line), including children’s wear, swimwear, casual home wear and pajamas,” Mr. Weng said.

The firm has also accelerated business development in Asia to reduce dependence on the US and European markets, and increase Points of Sale (POS) for its in-house brand GRAT.UNIC in department stores and shopping malls in major mainland Chinese cities and one in Hong Kong.

Great Group currently has 134 POS.

The firm’s first half net profit stood at 32.4 mln yuan on revenue of 327.5 mln.

Based in Quanzhou City, Fujian Province, Great Group is both an OEM and ODM manufacturer serving clients in Europe, the US, Australia, the Middle East and Southeast Asia.

Great Group also sells self-developed products under its proprietary GRAT.UNIC brand name in the PRC.

The company also manufactures and sells children's and infants' apparel, swimwear, thermal clothing, and lingerie, as well as garments, weaving products, ribbons, shoes, hats and bags. In addition, it is involved in the sale and distribution of garments and apparel, and clothes trading.

See also: GREAT GROUP: Underwear Maker Taking Steps To Bolster Bottom Line


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