All you need to know about Halcyon Agri's sizzling IPO

See why investors are buzzing.

In a release, the Singapore-headquartered natural rubber producer Halcyon Agri Corporation Limited (Halcyon Agri) said that it is the first pure midstream Indonesia natural rubber player to be listed in Singapore, and that strong investor demand has led to the placement price of S$0.36 per share, giving the firm a market capitalisation of S$104.4m.

Mr Robert Meyer, Executive Chairman and Chief Executive Officer of Halcyon Agri, said: “We are greatly encouraged by the strong interest we’ve received. It’s a testament to the unique business model we’ve developed and the solid results our management team has delivered. Our IPO marks the beginning of a new chapter for Halcyon Agri, establishing a platform to embark on our next phase of growth and development”.

Placement for Halcyon Agri shares closes January 30. First day of trading expected on February 1.

Halcyon Agri plans to use the net proceeds to the company of approximately S$13.8 million to be raised from the Placement for expansion and upgrading of its processing facilities and general working capital purposes.

Halcyon Agri has also been performing quite well recently.

In the nine months ended September 30, 2012 (9M2012), the Group produced and sold 51,691 tonnes of products, which represented a 56% increase over the same period in 2011 (9M2011).

The Group’s gross profit grew 85%, from US$8.5 million in 9M2011 to US$15.7 million in 9M2012 and EBITDA rose from US$5.3 million to US$12.3 million, representing a 132% increase. The Group delivered a net profit of US$9.2 million in 9M2012, a 92% increase from US$4.8 million in 9M2011.

As at December 31, 2012, the Group already had orders for 42,730 tonnes of its products for delivery in 2013, with customer options for a further 12,700 tonnes.

Outlook is also rosy with global demand for natural rubber still growing.

"Global demand for natural rubber continues to grow, primarily driven by the tyre industry, which accounts for 70% of the demand. With more than one billion vehicles in operation today, the replacement market for tyres on existing vehicles is a significant growth catalyst. Tyre sales are forecast to grow from 1.6 billion units in 2012 to 2.5 billion units in 2021," said Halcyon Agri.

"In addition, nearly 90% of the growth in global consumption of natural rubber through to 2021 is expected to come from emerging markets – China, India, Southeast Asia and South America – with the demand from China expected to rise by 96% from 2011 to 2021. Natural rubber consumption is projected to grow from 11.2 million tonnes in 2012 to 16.7 million tonnes in 2021," it added.

Mr Meyer said: “Indonesia is the world’s second largest producer of natural rubber, and our processing facilities are located in South Sumatra, Indonesia’s largest rubberproducing province, providing us with many opportunities to expand. Going forward, we are well equipped to deliver a disciplined, efficient approach to expanding our capacity and maximising our sales and margins.”